No buyers, no surprise there.
No buyers for Rex’s regional airline two months into voluntary administration process
By ROBYN IRONSIDE
No single buyer has emerged for Rex and there has been virtually no interest in taking on the regional airline, a source close to the administration has revealed.
EY was appointed as voluntary administrators to Rex on July 30, as the company teetered on the brink of collapse with debts of around $500m.
In August, EY sought an extension of the administration until November 25, to provide the best chance of a better return to the company’s 4800-plus creditors.
Since then few details have been revealed about the administration’s progress or any interested buyers.
But a source involved closely with the administration and the Rex board, said a number of sales had been made, which had provided some cash proceeds.
They included the sale of a Boeing 737 flight simulator, spare parts and non-essential real estate, including a small house near Sydney Airport purchased by former chairman Lim Kim Hai.
“Rex has always been a bit of a Frankenstein business that was put together so it was somewhat inevitable the business would be broken up,” said the source.
“It has also understandably been a slow process but I think things are starting to move finally.”
There were a number of parties looking at charter business Pel-Air and the Rex flight training academy but “no obvious buyers” for the regional airline.
Operating since 2002, Regional Express as it was known included a fleet of 57 Saab 340s, 25 of which were currently parked, and a flight network encompassing 45 destinations.
“I’m a bit surprised somebody hasn’t stepped forward because the business does make money, and I think the concerns around the fleet are somewhat overblown,” said the source.
“These Saabs have largely flown short distances over a long period of time so people like to talk about age in terms of years, but in terms of kilometres flown, it’s not that old a fleet.
“I think people might be waiting to see if the government might provide some sort of guarantees or support for the business to allow them to step in.”
Transport Minister Catherine King has previously said her department would work closely with administrators to ensure the future of the Rex regional airline, and “no option was off the table”.
A spokeswoman confirmed that remained their position.
The federal government was already acting as a guarantor for passengers buying tickets on Rex regional flights, with the promise they would be refunded if the service was cancelled.
There was no information on how many customers had taken up the offer, but on time performance statistics for August showed 95 flights, or 2.1 per cent of services were cancelled by Rex in the month.
It was not expected the administration would be extended beyond the current deadline of November 25, with the source suggesting deals would be finalised in coming weeks.
With regards to the flight training school he said a couple of parties were interested in buying the business as a going concern, while others were looking at bulldozing the academy and redeveloping the properties in Wagga Wagga and Ballarat.
“It’s a very large, very attractive property right next to the airport in Wagga and the same in Victoria,” he said.
“I do feel that it would a real shame for the flight academy to go, it is a unique service that’s available for airlines in Australia.”
As the administration unfolded, it was understood more evidence had emerged of how poorly the airline had been run under the direction of Mr Lim, who was ousted as chairman by his fellow board members in June.
That included a lawsuit brought by US aircraft maintenance firm Jet Midwest in the New South Wales Supreme Court, accusing Rex of stealing planes from the Kingman storage facility in Arizona.
The alleged theft of four Saab 340s, essentially for parts, occurred in late 2020 after Rex had paid only 10 per cent of the agreed purchase price, according to court documents.
Rex has denied liability or any knowledge of the aircraft’ whereabouts, the documents said.
Jet Midwest was seeking more than $10m in compensation from Rex plus legal costs, with the matter next due to come before the court for mention on October 18.
From The Australian (behind a paywall).
https://www.theaustralian.com.au/bus...b4532643fadcc8