Australian Government Assures Rex Airlines Of Contingency Plan Amid Financial Crisis

The Australian government has reportedly assured Regional Express Holdings (Rex) of a contingency plan to continue its services in the rural areas, after the country's third-largest airline went into administration and suspended trading of shares following a financial crisis.

Rex halted trading shares on Monday after The Australian reported the company had hired Deloitte to go through its books, according to a Reuters report.

Transport Minister Catherine King said the Australian government has readied a contingency plan to support the airline to continue its services; however, she did not promise a bailout package.

"We are absolutely aware of how important Rex is to regional connectivity," ABC News quoted King.

Rex plays a substantial role in connecting regional towns with the capital cities. The only airline that operated in the rural towns was at a risk of losing 2,000 jobs if the company collapsed, Transport Workers Union boss Michael Kaine stated.

In the first quarter of 2023/24, Rex had reported a loss before tax of AU$2.1 million.

"It's influence as a regional carrier is actually very, very important," David Beirman, senior lecturer in tourism at the University of Technology Sydney, said. "My particular hope, and I'm sure it's probably the same hope for the board of Rex, is that maybe government may come to offer a loan or some sort of arrangement whereby Rex can actually extricate itself from its problems."

Winding up of Rex would affect commutation in the remote areas, stated Queensland State Member for Traeger Robbie Katter, as the state government has partnered with Rex to subsidize several routes.

"These communities don't have access to any other operator ... and my concern is that if Rex goes there won't be a provider ready to jump straight in," Katter said.

Meanwhile, Prime Minister Anthony Albanese took a dig at the airline for moving away from its role as a sole flyer in the regional routes, while extending its operations to bigger cities like Sydney and Melbourne, reported News.com.

"One of the things that I expressed concern about was that Rex moved away from their traditional role of being a regional airline into flights from Sydney to Melbourne," Albanese told the media, but added that Rex was an important airline that "received substantial government support with no conditions attached."

The regional carrier was important for local economies, and the government would look into "any proposal" to help the company, Albanese stated.

Three months ago, Bonza, another budget carrier, had shut shop following poor financials.