Things Are Bad At Rex

Rex, which was forced to suspend jet-powered operations using its 737, has had the state of its struggles truly revealed.

Rex’s administrations state that the Australian carrier, placed into voluntary administration at the end of July, faces debts of some $500 million.

This substantial amount of debt is owed to some 4,800 creditors. Ernst & Young, the administrators, expressed concerns over when these amounts can be paid.

One of the biggest concerns about the state of Rex is the amount of debt accumulated in such a short time.

While the airline’s turboprop division continues to operate normally, the jet-powered division came to life in the early 2020s and is one of the more recent changes implemented internally. It hasn’t been a key part of the business for that long.

As part of this strategy shift, the airline pivoted from regional operations using the Saab 340 series to utilising Boeing 737s acquired to capitalize on the demise of TigerAir, another low-cost Australian airline.

While many applauded Rex’s 737 operations, which focused on serving capital cities and aimed to break Qantas’ stronghold on the market, some analysts were concerned about the strategy’s viability.

Effectively, with Rex being placed into voluntary administration and 737 operations ceasing, the airline has moved back to what was traditionally known for reliable and effective regional transportation across Australia.

As mentioned, getting the city services part of the business back up and running is considered unattainable. As such, administrators will consider pitching Rex as a regional carrier back to its roots.

Virgin Australia was quick to pounce on Rex’s misfortunes, announcing they would take some of the 737 leases to enhance their network and offer greater connectivity in the market. This would help to cater to the decline of city-based Rex flights.