Australian regional airline Rex is set to go into administration, according to sources, with Ernst & Young set to be appointed as administrator.
Trading in the airline’s shares was halted on Monday pending further announcement.
According to sources, who wish to remain anonymous, the appointment of Ernst & Young (EY) could be announced as early as Wednesday.
A spokeswoman for Rex declined to comment, and EY did not immediately respond to phone calls or text messages.
The recent collapse of an Australian airline has left an estimated 2,000 jobs “in the dust”, according to the Transport Workers Union.
Trading in Rex shares was halted on the ASX on Monday amid recent boardroom turmoil and millions of dollars in losses.
The trading halt also came amid reports that Rex had hired consulting firm Deloitte to audit the airline’s books. Deloitte referred media inquiries to Rex.
Transport Minister Catherine King said the government was in contact with the airline and was monitoring the situation “hour by hour”.
Concerns were growing on Tuesday over the fate of regional airline Rex (plane pictured), with an estimated 2,000 jobs left ‘in limbo’
“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 some of the 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.
Ms. King noted that unlike Bonza (which recently went bankrupt), Rex does not lease the planes, but owns them.
“It is up to Rex to inform its customers that the service is operational today,” she said.
“There has been some instability within the board recently, but I want to reassure people: Rex is an important airline and we are monitoring the situation closely.”
Rex shares have fallen 35 percent this year. The airline mainly serves regional cities, but has recently added services between capital cities such as Sydney and Melbourne, routes dominated by larger rivals Qantas and Virgin Australia.
Several regional communities in the country rely on the airline, which was formed 22 years ago after the demise of Ansett.
Since the Covid-19 pandemic, Rex has been struggling with a lack of profitability as the entire industry faces difficult conditions.
Since the Covid-19 pandemic, Rex has struggled with its profitability as the entire sector has struggled with difficult conditions (pictured: Melbourne Airport)
Earlier in July, creditors voted to liquidate budget airline Bonza. Passengers pictured at Sydney Airport
In February, Rex reported a net loss of $3.2 million for the first half of its 2023/24 financial year due to rising costs, particularly for fuel.
But that was an improvement from the $16.5 million loss reported in the corresponding period last year.
In June, Rex announced that long-serving chairman Lim Kim Hai was stepping down, although he remains on the board as a non-executive director.
In July, Mr Lim, a major shareholder, requested a general meeting of shareholders to remove a number of directors, including non-executive chairman John Sharp.
