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AAP
AAP
National
Miklos Bolza and Alex Mitchell

Rex bailout likely, but not necessary: administrator

Administrators for Rex say the airline has a strong, viable future once it's "reshaped". (Mick Tsikas/AAP PHOTOS)

Regional carrier Rex remains locked in bailout discussions, but its administrators say the airline can still thrive without government support.

Administrators were appointed to five companies in the Rex group on July 30, with the airline grounding its Boeing 737s on routes between major metropolitan centres.

Regional flights have continued while a buyer or financial lifeline is sought for Rex.

The federal transport department has held daily talks with the airline and is widely tipped to financially support Rex, so long as it prioritises "critical" regional flights.

Rex plane (file image)
A vote by tens of thousands of creditors will decide whether to resurrect or liquidate Rex. (Jane Dempster/AAP PHOTOS)

Sam Freeman - one of three EY administrators appointed to Rex - said government messaging indicated it would support the airline if needed, but believed it could remain sustainable without a bailout.

"We're doing a lot of modelling there to suggest that it's a viable business into the future, it does need to be reshaped into that … but definitely we see a stronger, viable Rex into the future," he told AAP.

"But the government's been pretty clear saying Rex is critical infrastructure for regional Australia and to the extent that support is needed, it's likely to be there."

Hoping the administration program would last no longer than five weeks, Mr Freeman said a "full spectrum" of potential buyers had presented since they took over, including businesses from within the aviation industry.

"There's been considerable outreach to the administrators from parties in the industry interested in taking the regional business forward and we will be working with advisers to progress that in the coming weeks," he said.

"It's a reliable regional network, and really it's about keeping that network strong, and keeping forward bookings coming from customers so we have a viable, profitable and sustainable Rex."

Earlier on Tuesday, Rex was in court ahead of a vote by tens of thousands of creditors to decide whether to resurrect or liquidate the company.

Barrister Daniel Krochmalik, representing EY administrators, told a Federal Court hearing Rex had 4450 creditors, including its principal secured creditor Hong Kong-based investment firm PAGAC Regulus Holding (PAG).

Rex staff (file image)
More than 1000 Rex staff are awaiting pay, the court was told. (Jane Dempster/AAP PHOTOS)

There were 1057 employees who were awaiting pay, as well as staff who had lost their jobs following the administration who were seeking their entitlements, the court was told.

Between 54,000 and 185,000 passengers whose flights were cancelled also needed refunds.

Justice David Yates made orders allowing for the first meeting of creditors to be held virtually on Friday.

He was told Rex director and major shareholder Lim Kim Hai had issued a notice to effectively oust the airline's other directors about two weeks before the company entered administration.

Mr Lim, who is also Rex's former executive chair, has requested a meeting to elect a new board be held despite the firm's ongoing financial struggles.

But that meeting will be postponed until after a second scheduled creditors' meeting, where a vote will decide whether to return the Rex companies to the existing board, place them under a deed of company arrangement or liquidate them.

PAG has agreed to fund the administrators but details of this agreement are confidential. 

Rex signage (file image)
Rex has struggled with profitability since expanding in 2021 to compete on capital-city routes. (Jane Dempster/AAP PHOTOS)

At Friday's first meeting, creditors will be asked to vote on a committee of inspection made up of representative creditors, who will assist in the administration process.

Rex emerged from the collapse of Ansett in 2002 and offers passenger, freight and chartered flight services as well as flight training.

It has struggled with profitability since aggressively expanding in 2021 to compete on capital-city routes against dominant operators Qantas and Virgin Australia.

In February, the airline reported a net loss of $3.2 million for the first half of the 2023/24 financial year as it burned through money spent on its major-city services.

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