Turbulence at Rex Airlines appears to be deepening after the carrier requested a trading halt following speculation it would appoint consultants to turnaround its financial woes.
On Monday, the ASX announced it had suspended trade in the airline’s shares after it had requested the move pending an announcement related to a news article published on Saturday, understood to be a report in The Australian that the airline had appointed turnaround experts from Deloitte.
Rex’s request suggested an imminent related announcement, with the halt in place until the commencement of trade on Wednesday.
The prime minister, Anthony Albanese, said an airline running into trouble was a weekly occurrence in the tough, global industry.
“One thing we need to do is to make sure that we have a viable and ongoing Australian aviation industry,” he told ABC News.
But he added that a range of communities around the nation relied on the carrier.
“Rex is the only airline to go to some of those destinations, so it’s important,” Albanese said.
The prime minister met his transport minister, Catherine King, on Monday and further information had been sought from the airline, he said.
Opposition transport spokeswoman, Bridget McKenzie, accused the minister of dithering over reforms to aviation, perpetuating a lack of competition in the sector.
“It is time this government pulled its head out of the sand and starts pulling on the levers to foster more competition, better reliability and more affordable airfares in Australia,” she said in a statement.
“Two aviation companies control more than 93% of the domestic space and companies like Rex create more competition which means cheaper airfares across the board.”
The regional airline, formerly known as Regional Express following its formation after the death of Ansett, has since 2020 began vying for a share of the lucrative market between capital cities, flying a fleet of nine Boeing 737s mostly between Sydney, Melbourne and Brisbane.
Rex has steadily expanded its jet operations including to Perth, acquired fly-in fly-out operator National Jet Express, and outperformed Qantas and Virgin in on-time performance.
However, it has struggled with a range of issues, including allegations of anti-competitive behaviour from Qantas, difficulty accessing strategically important Sydney airport slots at peak times – a gripe that failed budget operator Bonza also complained of – as well as parts and pilot shortages hampering its core regional operations relying on its ageing fleet of 36-seater Saab 340 aircraft.
Rex reported a loss of $3.2m for the first half of the 2023-24 financial year in February, compared with a $16.5m loss in the prior period, saying escalating costs, particularly for fuel, made it hard to predict full-year profitability.
Rex has also been rocked by leadership tensions, with major shareholder and former executive chairman Lim Kim Hai ousted in June, replaced by John Sharp, the deputy chairman and former Nationals federal transport minister. Lim has since pushed to remove Sharp and three other directors from the board, with a special shareholder meeting to vote on Lim’s demands.
Australian Associated Press contributed to this report.
