REX: Offers in for regional airline. Administration extended until October 2024

There has been quite a lot of activity on the Regional Express (REX) front. The regional airline has been involved in everything from referrals to the Australian Federal Police, the setting up of a data centre for potential bidders, and the sacking of even more staff.

More than three weeks since the airline went into administration, and indicative bids to purchase the airline are apparently in. The data room was opened so that potential bidders could search through the figures, with a deadline for non-binding offers of 14 August.

Potential bidders

The AFR Street Talk column is reporting that amongst those interested in bidding are Singaporean former owner Lim Kai, Hai – reputed to have been forced to step aside as the company Chair by the board. The new Chair and ex-Australian minister John Sharp is apparently in league with charter services provider Skytraders. He was formerly a director/shareholder of the company.

Logistics and transport private equity firm Allegro Funds is also in the mix. It grabbed Team Global Express back in 2021with ex Australia Post CEO Christine Holgate at the head. This under-the-public-radar airline has 34 aircraft making 630 flights a week domestically.

Brisbane-based charter and FiFo operator Alliance Airlines is also in the mix along with some overseas investment and private family funds. There have also bee some cryptocurrency-centred tyre kickers.

Most interestingly, Bain Capital Credit, which is the main stakeholder in Virgin Australia is in consortium with others including Aviation Training Holdings P/L has shown an interest.

The airline goliath Qantas, and its potential David, Virgin Australia are also in the mix, although standing back at the moment. AFR speculates that either might be waiting for the current sail process to flounder, and then to sweep in with some government assistance and rescue the regional flyer.

Finally, Qatar Airways has been rumoured to be interested in taking a foundation stake in Virgin Australia, and thus setting a bed price for its public float might also be interested in taking the whole shebang, not just pieces of it like the pilot training school or the charter part, like other bidders.

Australian Federal Police get involved over boardroom stoush

The Australian Federal Police (AFP) were called in around 18 August. They are looking into whether regional airline REX’s former chair and biggest investor illegally recorded the final board meeting. He attended the meeting remotely. In my experience when attending a meeting using Microsoft Teams or Zoom, there is a hard-to-ignore big red button and a chime to alert you when a meeting is being recorded. Maybe he used some other means.

‘The report to the AFP alleged that Lim Kim Hai, who was deposed as Rex’s chairman earlier this year and controlled more than 50 per cent of the register until administrators at EY were called in on July 31, illegally recorded the final board meeting.’

Australian Financial Review

This kind of behaviour is apparently symptomatic of the enmity between various parties in the dying days of Regional Express immediately before it went into administration on 30 July.

Extra time for administrators of regional airline

The Administrators of REX have been given some extra time in which to achieve a sale of the airline. The date has now been extended until 25 November. The administrators argued that this was in the best interests of REX’s creditors, including their current employees.

The administrators last week dismissed another 73 staff members at REX. That’s in addition to several hundred already laid off. Given that the airline is no longer flying its inter-capital city routes, this is no surprise.

2PAXfly Takeout

There is still some way to go in this sorry saga. Both the story of what led here, and the story yet to unfold will make an interesting historical study.

The sadness is that this is the second airline lost in the Australian industry. OK, well it isn’t completely lost. REX will likely continue as a regional airline. But it will no longer be a competitor to Qantas/Jetstar and Virgin Australian.

That’s a pity.

Expect to see the price of capital city flights rise real soon.