Govt 'prepared to play a constructive role' to support Rex Airlines: Chalmers
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More news: Federal Treasurer Jim Chalmers said that expected job losses at Rex Airlines are "very, very concerning" and noted that the government is "prepared to play a constructive role" after the regional carrier entered voluntary administration, grounded its Boeing 737 fleet and cancelled major airport flights.
What they said: "It’s been a really concerning week for Rex, for its customers and for its workers, and we’ll go through what the company says I think later today or certainly this week and respond when we can to that," Chalmers said in an interview with ABC Radio National.
"We do know that regional flights are really important to regional communities, to regional economies, and the Prime Minister, the Transport Minister, the New South Wales Premier have all said that we want to make sure that people can still access flights on these regional routes."
Asked about an estimated 850 jobs at risk at Rex, Chalmers said: "Of course, it is, very, very concerning. Any job losses are obviously concerning but particularly job losses of that magnitude."
Rex Airlines in administration, flights cancelled, 737 fleet grounded
The news: Rex Airlines has entered voluntary administration, grounding its domestic Boeing 737 fleet and cancelling major airport flights, marking the second domestic airline to fail this year after startup Bonza.
Ernst & Young has been appointed administrators of Regional Express Holdings Ltd and a number of its subsidiaries, including Rex Airlines, the company said in a statement.
Prepaid ticket holders will have their tickets honoured on regional routes, while regional Saab 340 flights are currently unaffected and will continue to operate, it said.
The numbers: The lossmaking airline, which expanded from regional routes to major cities like Sydney and Melbourne to compete with Qantas and Virgin Australia, has struggled in a price war, leading to a 34% drop in its share price this year, reducing its market value to $64 million.
Rex reported a $6.12 million loss in the half year ending 30 December, down from the $20.76 million loss a year prior.
It had $580.8 million in liabilities, including debt facilities of up to $175.4 million with Westpac and $150 million with Asian private equity firm PAG. Cash on hand at the end of the period was $54.58 million.
The context: The voluntary administration process will resolve the company's future by either securing a rescue deal or finding the best result for creditors. Westpac and PAG will play a central role in negotiations.
What they said: “This is a difficult moment for Australian aviation,” Virgin Australia CEO Jayne Hrdlicka said. “It is also a reminder of the challenging nature of our industry.”
Virgin has offered to transfer, free of charge, tickets for Rex customers on cancelled flights to 13 overlapping Virgin Australia services. Virgin and Rex's administrators were also considering a codeshare or interline agreement to support regional customers, they said.
The sources: Regional Express Holdings statement, Virgin Australia Statement, Treasury media release
