Australian airline Rex goes into administration

Australian regional airline Rex is set to plunge into administration, with Bloomberg reporting that Ernst & Young (EY) will be appointed as the airline's administrators. 

The popular regional carrier's shares went into a trading halt this week and the financial news website claimed EY's appointment could be announced on Wednesday.

A spokeswoman for Rex declined to comment, while EY didn't immediately return a phone call or reply to text messages.

Rex's shares went into a trading halt on the ASX on Monday following recent boardroom turbulence and multimillion-dollar losses.

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.

Transport Minister Catherine King said the government was in touch with the airline and keeping an 'hour by hour' watch on the situation.

'Regional Australians rely on Rex,' she told Channel Seven's Sunrise 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.'

Rex has built a strong reputation since its inception in 2002 and became known for its reliability.

The Bureau of Infrastructure and Transport Research Economics found in April the airline cancelled just one per cent of its flights - beating all of its competitors.

The domestic airline was recognised internationally at the World Airlines Awards in early July when it received the title for Best Regional Airline in Australia/Pacific. 

Ms King noted that unlike Bonza, which recently collapsed, Rex owns rather than leases its planes.

'It is up to Rex to be informing its customers that it's operating services today,' she 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.'

Rex shares have fallen 35 per cent this year. The carrier mostly serves regional cities, but has more recently added services between capital cities such as Sydney and Melbourne, routes which are dominated by larger rivals Qantas and Virgin Australia.

A range of regional communities around the nation rely on the carrier, which emerged 22 years ago following the collapse of Ansett.

Since the Covid-19 pandemic, Rex has struggled with its profitability as the overall sector struggled in tough conditions.

In February, Rex reported a bottom line net loss of $3.2million for the first half of the 2023/24 financial year on the back of rising costs, especially for fuel.

But that was an improvement on the $16.5million loss reported in the previous corresponding period.

In June, Rex announced that long-serving executive chairman Lim Kim Hai was stepping down, though he remains on the board as a non-executive director.

In July, Mr Lim, a significant shareholder, requested a general meeting of shareholders to remove a number of directors including non-executive chairman John Sharp.