Govt pours further $60m into Rex as US buyer tips in $50m
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The news: The Government will supply an additional $60 million commercial loan for the recapitalisation of struggling regional airline Rex in parallel with a $50 million contribution by Rex’s US buyer Air T.
The numbers: Approximately $90 million of existing debt will be carried forward and the new commercial loan of $60 million will be provided to Rex, a statement released by Minister for Infrastructure, Transport, Regional Development and Local Government, Catherine King, said on Tuesday.
This will supplement the $50 million being contributed by Air T towards the recapitalisation of the business.
The context: Tuesday’s statement said that in exchange for the additional government financing, Air T has agreed to a number of commitments including returning more aircraft to service and increasing the frequency of profitable flights across the Rex network.
Additionally, “To safeguard this public investment, the Government will retain its security over all Rex’s aircraft and simulator. This will ensure Rex’s Saab fleet cannot be sold without the Government’s permission and will continue to service communities across regional and remote Australia”, King said.
An additional $5 million will also be provided by the government to support regional airports that have been impacted by Rex’s voluntary administration.
The statement gives clarity on the Albanese Government’s funding arrangements to secure Rex’s sale to the US air services company, which now tops $220 million.
The Government bought the debt of investor PAG Capital and received another $30 million in financing in June, when the federal court extended the regional airline operator's voluntary administration period to keep regional routes flying until December.
The source: Minister Catherine King statement
