Federal government guarantees regional flights for Rex customers during administration (2024)

The federal government will guarantee all regional flight bookings for customers of Rex during its administration process over the next month.

Administrators were appointed to oversee Rex after the airline collapsed in late July, resulting in about 600 job losses.

Federal Transport Minister Catherine King said the regional flight guarantee would provide certainty for Rex's regional customers.

"This will give customers confidence to continue booking regional flights with Rex – flights that allow them stay connected to family, friends, healthcare and other services – while also helping to maintain regional aviation in Australia," she said.

The guarantee means that if Rex customers have their flights cancelled, they will be entitled to receive a full refund.

Administrators for Rex began a sales process for the airline last Friday.

"Rex welcomes the announcement today of the federal government's Regional Flight Booking Guarantee, which is a positive step toward securing the future for Rex, Rex's 1,200-plus employees and all Australians who rely on these services to connect their communities," said one of the administrators, Sam Freeman.

"We have experienced firsthand the importance of Rex's regional services to the communities the airline serves and would like to express our gratitude to the federal government for stepping in with this support."

Administrators said the federal government's flight booking guarantee will give Australians confidence to continue booking to or from a regional destination on Rex.

"The guarantee will help Rex to keep flying while we undertake the recapitalisation of the airline and secure its future," Mr Freeman said.

Guarantee is not a bail out

The federal government said the flight guarantee did not have a set dollar figure attached, but is instead a provision that would be drawn down on in the event flights were cancelled.

Both the federal government and Rex's administrators said that the regional flight guarantee was not a bail out for the airline.

Conversations between administrators and the federal government about potential support for the airline are ongoing, however a government spokesperson said it is confident a "market solution" — or a buyer — would be found for the business.

On Monday, Mr Freeman made multiple media appearances to confirm that the airline's regional services were still operating, and it was only its capital city routes serviced by Boeing 737s that had been permanently grounded.

"Since we were appointed, the regional network has operated without fault, and that's through a lot of hard work by the team here at Rex," he told The Business.

"There's been more than 20,000 passengers in the first week of the voluntary administration alone.

"So, clearly the business is functioning and doing exactly what it needs to do."

Rex working to find an investor

Rex was placed into voluntary administration at the end of July after days of speculation about the airline's future when it was placed into a trading halt on the Australian Securities Exchange (ASX).

Administrators from consultancy firm Ernst and Young (EY)believe a shortage of pilots, supply chain issues and flights not being flown at capacity led to the company accruing more than $500 million in debt.

On August 9, administrators held their first creditors meeting, revealing that the airline owes money to 4,800 creditors — including former staff, suppliers and other agencies.

It could take months before creditors were paid what they were owed.

"We're currently undertaking a process to find an investor committed to a sustainable commercial regional network," Mr Freeman said.

In the weeks since Rex was placed into administration, the federal government has reiterated its support for the airline and said it would evaluate "any proposals" to assist the business to ensure its regional and rural services continue.

But on Monday, Mr Freeman would not be drawn on whether the sale of the Rex business was likely to be dependent on a bailout from the federal government, or whether administrators were lobbying for government assistance.

Mr Freeman said administrators were confident that a buyer for the airline would be found.

"There has been a really significant amount of buyers reaching out since day one of the administration," he said on Monday.

A second creditors' meeting is expected to be held in early September.