Federal Transport Minister Catherine King has said Rex would likely have collapsed without government help.
Speaking to the media following the announcement this week of the airline’s sale to US aviation group Air T, the Minister said she “didn’t believe Rex would be flying today” if the government had not intervened to shore it up, including buying most of its debt and guaranteeing its operations.
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“I think that’s been really important. I think we also didn’t want to just spend money on it,” he said.
“It’s an investment that the Commonwealth has made to keep the administration going, to put in place a customer guarantee, to make sure that we can continue to get that service opportunity and
“I think it’s very important to have faith that REX is flying… [that] It will continue to fly to the regions and will be the backbone of Australia’s regional aviation along with many other smaller regional airlines also flying to [regional] areas, and that there is confidence that we have a regional airline here in Australia.”
The Federal Government has shored up the struggling airline during its administration, including guaranteeing its regional bookings and preserving its slots at Sydney Airport, and in April bought $50 million of its debt to ensure a greater say over its future.
It had also injected $80 million in funding into Rex late last year to keep the airline’s vital regional air services running.
Minister King also sought to calm concerns that Air T was looking to part ways with Rex’s Saab 340 fleet, saying the government had “done its due diligence” and noting that the company had said in its Nasdaq announcement this week that it would return the remainder of the aircraft to service.
“The government intervened to give management time to find a credible buyer for Rex. It will now be up to the creditors to determine whether they are comfortable with that plan, and they will have a creditor meeting to see if Air T can do it,” he said.
“We’ve done our due diligence on the company. I think the good thing, and there’s a lot of reporting on this today, is that it’s an aviation business. It’s an aviation business that buys other long-term aviation businesses to stay in and invest in.
“The assurances given by Air T in their statement yesterday assure me that they look forward to being in the Australian market with a passenger airline and serving all the regions they now serve.”
According to the Minister, the government has also sought assurances that the airline’s network will continue to be serviced and its jobs preserved.
“While it will be foreign owned, it will be an Australian company subject to Australian employment law. I am pleased to hear that they intend to retain all the workers and also the management team,” he said.
“I look forward to – if the creditors agree that this is the right option for Rex to move forward, we as a government obviously think it is, but that will be up to the creditors – to make sure that all the unions are involved with this airline, because not only do we want to keep the regional routes running, but we also want to keep great aviation jobs in our regions.”
Air T expects to close the Rex purchase by the end of the year, subject to creditor and other approvals.
