Budget airline Rex has been declared bankrupt and flights between capital cities have been grounded.
The airline suspended trading on the ASX on Monday and it was confirmed on Tuesday evening that EY has been appointed as administrator.
Rex is cutting flights between major cities and focusing on regional flights instead.
A source told the Australian Financial Review that the federal government has stepped in to ensure regional flights are not cut, but the airline will no longer compete with other carriers on existing routes between major cities.
Virgin Australia immediately offered Rex customers a free transfer to comparable flights.
The airline also encouraged Rex personnel to apply for jobs with the airline.
Virgin Australia has also acquired a stake in Rex’s Boeing 737-800s. The airline plans to lease three of the aircraft that Rex will no longer operate.
“Virgin Australia has offered Rex customers with an existing ticket for a flight that was cancelled due to the administrative process the opportunity to transfer their ticket to the 13 overlapping Virgin Australia services at no additional charge,” EY said.
Budget airline Rex declared bankrupt, flights between capitals grounded
The airline suspended trading on the ASX on Monday and on Tuesday evening it was confirmed that EY had been appointed as administrator
‘Rex and Virgin Australia are also exploring opportunities to support regional customers. This could involve Virgin Australia selling Rex’s regional services through codeshare or interline arrangements and extending Velocity Frequent Flyer benefits to Rex’s regional customers.’
Rex is the second major domestic airline to go bust in Australia this year, following the collapse of Bonza.
Rex is even more important: the aircraft flies to 56 destinations across the country and is a lifeline for a number of small regional communities.
Prime Minister Anthony Albanese said earlier on Tuesday that the federal government was “concerned” about Rex and would evaluate its options.
But he also noted that the airline has already received “substantial government support without conditions.”
Transport Minister Catherine King said the government was in contact with the airline and was monitoring the situation “hour by hour”.
Where Rex flies: The regional airline is a vital lifeline for regional communities – flying 56 routes
“Regional Australians trust Rex,” she told Channel Seven’s Sunrise on Tuesday.
‘It’s an incredibly important airline. In many cases it’s the only airline that flies to a series of smaller rural towns and people are very dependent on it.
“We are taking this very seriously and are very vigilant about what is happening. We are monitoring the situation closely on an hour-by-hour basis.”
Since its founding in 2002, Rex has built a strong reputation and is known for its reliability.
According to the Bureau of Infrastructure and Transport Research Economics, the airline canceled just 1 percent of its flights in April, outpacing all competitors.
The domestic carrier was internationally recognised at the World Airlines Awards in early July, where it was named Best Regional Airline in Australia/Pacific.
