Rex Airline Owes AU$500 Million To 4,800 Creditors Amid Voluntary Administration
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Regional airline Rex, which went into voluntary administration last week, was facing a debt of AU$500 million, owed to about 4,800 creditors.
Rex grounded its capital city services on July 30, and at the first creditors' meeting held by Ernst & Young (EY) on Friday, it was revealed that Rex airline owes a hefty AU$500 million to creditors, many of whom were former employees of the airline, ABC reported.
The creditors were told Friday that it might take months for them to receive their payouts.
Consultation regarding the layoffs started on July 31, with termination notices being circulated the same night. Among the 594 staff laid off during initial terminations, 343 served in its capital city routes.
The airline has also laid off another 251 employees from various departments or teams outside the capital city routes, but the regional division is still operating normally, without any interruptions or staff cuts.
Rex's regional flights remain in operation thanks to ongoing financial support from private equity firm PAG Asia Capital, which is largely helping the airline stay afloat during its search for potential buyers.
The authorities are constantly scrambling to strike a good deal for the airline, said Samuel Freeman, a business turnaround specialist and partner at EY.
Freeman, a corporate turnaround expert, informed Rex creditors on Friday that administrators were contacting "a large number of likely interested parties" to find buyers or investors.
"The process has formally commenced," he said, The Guardian reported. "Some are already executing on disclosure agreements ... there's been quite some interest, which is really positive."
Chris Minns, the premier of New South Wales, where the airline is headquartered, has left the door open for state aid, The Guardian reported.
Rex's financial issues have been attributed to several challenges, including a pilot shortage and difficulties obtaining supplies.
EY Australia was asked by Rex's board on May 9 to carry out an independent assessment of the airline's financial status. The review reports, presented on May 20, played a pivotal role in evaluating the airline's fiscal well-being and influencing the resolution to transfer Rex into voluntary administration.
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