Rex sale talks struggle to take off
Robyn Ironside
A deal to buy Rex Airlines is being complicated by dual negotiations with administrator EY and the federal government, which appear set to take the drawn-out process down to the wire.
It’s understood a potential buyer is seeking an undertaking of support from the government, which has already pitched in $160m to keep Rex in the air during the 14-month-old administration.
The Albanese government has previously indicated any financial support to a successful bidder would be “conditional on commitments to provide an ongoing reasonable level of service to remote and regional communities, and good value for money to taxpayers”.
In an effort to secure the sale, EY is also trying to lock down new enterprise agreements with staff including pilots and cabin crew, and return more of Rex’s ageing fleet of Saab 340s to the sky. Currently 30 of the 56 turboprops are in operation.
Federal government data for August showed Rex fared the worst of any airline in terms of punctuality and reliability, with more than 30 per cent of flights arriving late.
The latest extension gives the administrators until December 5 to secure a sale of the early negotiations failed.
While Sydney-based Anchorage Capital Partners and West Australian regional airline Nexus have pulled out of the race, it’s believed US holding company Air T remains interested.
As the business struggled with mounting debts, board tensions erupted and executive chairman Lim Kim Hai was ousted by his fellow directors with deputy John Sharp installed in his place.
The Australian Securities and Investments Commission (ASIC) brought charges against Rex and Lim Kim Hai of deceptive and misleading misconduct.
John Sharp and directors Lincoln Pan and Siddarth Shrotri are also accused of breaching the Corporations Act by allegedly failing to discharge their duties.
All four men have denied the allegations.
The matter is due to return to the New South Wales Supreme Court next month.