The federal government has announced it will provide financing to the company that is set to acquire Rex Airlines.
The government will restructure Rex’s existing debt, with approximately $90 million of existing debt to be carried forward and a new commercial loan of $60 million to be provided to the airline.
This loan supplements the $50 million being contributed by Air T towards the recapitalisation of the business as part of the acquisition.
In exchange for this financing and to ensure value for taxpayer money, Air T has agreed to a range of commitments aimed at preserving essential regional aviation connectivity and improving governance arrangements.
This will include returning more aircraft to service and increasing the frequency of profitable flights across the Rex network.
To safeguard this public investment, the government will retain its security over all Rex’s aircraft and simulator. This will ensure Rex’s Saab fleet cannot be sold without the government’s permission and will continue to service communities across regional and remote Australia.
Separately, the government is also announcing that it will establish a new program capped at $5 million for local government and regional and remote airports that supported Rex through the voluntary administration process.
This new program will mitigate financial barriers to these organisations continuing to provide essential services to their communities. Eligibility will be based on the amount owed to the organisation by the Rex regional business when it entered voluntary administration.
This program is a separate Australian government initiative and is not part of the negotiations with Air T for its acquisition of Rex.