Federal Government Guarantees Bookings For Rex Customers Amid Administration

The federal government on Thursday guaranteed that customers of Rex Airlines can book flights and demand a full refund in case of cancellation over the next month, as the company continued services under administration.

The federal government and Rex administrator, however, maintained the guarantee does not translate as a bailout offer, reported ABC News.

Late July, Australia's regional carrier had announced entering voluntary administration citing financial loss, and firing about 600 staff.

"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," Federal Transport Minister Catherine King said. "They will either fly or get their money back."

Administrator Sam Freeman said more than 20,000 passengers flew Rex in the first week of administration, adding that only the capital city routes serviced by Boeing 737s have been grounded.

The airline held its first creditors' meeting to initiate the sale process last Friday, after which Freeman said he was confident of finding a buyer for the carrier, reported The Guardian.

"Some are already executing on disclosure agreements ... there's been quite some interest, which is really positive," he said.

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

The airline company, carrying AU$500 million in debt, was funded by private equity firm PAG Asia Capital. The firm granted AU$150 million for its expansion into jet operations.

Meanwhile, Transport Workers' Union's national secretary Michael Kaine urged the government to take immediate steps to guarantee the entitlements due to redundant Rex workers.

Rex is Australia's second budget airline company to fold after Bonza closed down in April.