“Contingencies” put in place amid fears over Rex Airlines' future
A Rex Airlines plane is seen at Tullamarine Airport in Melbourne, Monday, March 1, 2021. Source: AAP Image/ Luis Ascui
The federal government is keeping an “hour by hour” watch on regional airline Rex amid rising concerns the carrier is in trouble.
Rex’s shares went into a trading halt on the Australian stock exchange on Monday following recent boardroom turbulence and multimillion-dollar earnings losses.
An announcement is expected by the opening of trade on Wednesday.
“In the meantime, it isn’t appropriate for us to make any further comments,” a Rex spokesperson told AAP.
The trading halt also came amid reports Rex had called in consultancy firm Deloitte to review the airline’s books. Deloitte referred media inquiries to Rex.
Asked about the developments, Transport Minister Catherine King said the government was in touch with the airline.
“Regional Australians rely on Rex,” she told Seven’s Sunrise program on Tuesday.
“It’s an incredibly important airline; in many cases, (it’s) the only airline going into a range of smaller country towns and people are heavily reliant on it.”
“We are treating this very seriously and being very vigilant about what is happening, and keeping an eye on the situation hour by hour.”
King said that unlike Bonza, which recently collapsed, Rex owns rather than leases its planes.
“It is up to Rex to be informing its customers; it’s operating services today,” the minister said.
“There has been some instability in the board recently … but I do want to reassure people that Rex is an important airline … and we are watching the situation carefully.”
Many regional communities around the nation rely on the carrier, which emerged 22 years ago following the collapse of Ansett.
King said the government was putting “some contingencies” in place to make sure travellers continue to get services in those areas,
Since the COVID-19 pandemic, Rex has struggled with its profitability alongside other airlines.
In February, it reported a bottom-line net loss of $3.2 million for the first half of the 2023/24 financial year on the back of rising costs, especially for fuel.
However, that improved on the $16.5 million loss reported in the previous corresponding period.
In June, Rex announced long-serving executive chairman Lim Kim Hai was stepping down.
He remains on the board as a non-executive director.
Earlier this month, Lim, a significant shareholder, requested a general meeting of shareholders to remove a number of directors including non-executive chairman John Sharp.
Rex shares last traded at 56.5 cents on Friday. They were at 79 cents a month ago.
This article was first published by AAP.
Never miss a story: sign up to SmartCompany’s free daily newsletter and find our best stories on LinkedIn.
