Flights cancelled as Rex Airlines enters voluntary administration

Investing

Rex Airlines has entered voluntary administration, cancelling all flights between major airports.

Rex Airlines flights between major Australian airports have been cancelled. Image : Getty

Key Takeaways

The airline’s Boeing 737 fleet, which services major capital city airports, has been grounded.
Flights between major airports have been cancelled but the airline continues to operate its regional routes.
The Transport Workers Union has reported that up to 850 jobs are expected to be axed as a result of the airline’s financial troubles.
EY, the appointed administrators, aim to restructure the business to ensure continued service to regional Australia.
The ASX-listed company entered a trading halt on Tuesday.

What we know

Regional Express Holdings – Rex Airlines – and a number of its subsidiaries entered voluntary administration on Tuesday, with EY appointed administrators. Flights between major airports have been cancelled, with Rex’s domestic fleet of Boeing 737 aircraft all grounded. Affected customers were contacted by Rex Tuesday night and told not to come to the airport. Rex’s regional flights will continue to operate.

Virgin Australia offered affected Rex customers alternative flights, which they could book free of charge. Qantas and Jetstar also offered help to impacted customers.

“Rex customers impacted by cancelled flights due to the grounding of their domestic jet services can contact Qantas and Jetstar to be reaccommodated on the same route as their original booking at no charge, where we have seats available,” the company said in a post to X.

This is a challenging day for our industry and we are sad to see Rex enter voluntary administration with the immediate suspension of its Boeing 737 operations.

We know this will be a difficult period for many Rex customers and employees and we stand ready to assist.

Rex…
— Qantas (@Qantas) July 30, 2024

Qantas also said it was prepared to connect Rex employees with “potential opportunities” within the Qantas Group.

Big number

850 . That’s how many jobs are expected to be axed.

Crucial Quote

“Look, if you are booked on a Rex jet service – so that’s any flight that was due to be operated by Rex to any of the major Capital Cities or the Gold Coast – do not come to the airport,” Melbourne Airport spokesperson Andrew Lund said.

Key background

Rex took a hit in FY23, recording losses of more than $30 million. Lim Kim Hai, the executive chairman for Rex, compared that to Qantas’ record underlying profits before tax of $2.47 billion, saying, ‘It is most disheartening to see the wicked prosper’.

In February this year, Rex reported a loss of $3.2 million for the first half of FY24 (compared to a loss of $16.5 million in the previous six months). Rex shares were trading at 56.5 cents before the company entered a trading halt on Tuesday.

Tangent

Rex isn’t the first carrier to hit turbulence: low-cost airline Bonza entered voluntary administration in April this year, after the airline’s fleet of Boeing 737-MAX 8 planes had been repossessed by creditors and it scaled back flights. 323 Bonza staff lost their jobs.

Are you – or is someone you know –creating the next Afterpay or Canva? Nominations are open for Forbes Australia’s first 30 under 30 list. Entries close midnight, July 31, 2024.

Look back on the week that was with hand-picked articles from Australia and around the world. Sign up to the Forbes Australia newsletter hereor become a member here.