The federal government will acquire $50 million of debt from Rex's largest creditor, private equity firm PAG Asia Capital, after it lurched into administration and stopped flying between metropolitan cities.
Transport Minster Catherine King said the purchase would guard against the prospect of the firm putting the carrier into liquidation, comprising critical regional services.
"We're now stepping into their shoes, taking over the last remaining part of that substantial debt in order to provide an opportunity for a second sale process to continue," she told reporters in Werribee.Â
"Obviously, as a creditor, we would be seeking to get that money, that debt back through any second sale process."
Rex went into administration in mid-2024 with debts of around $500 million. (Luis Ascui/AAP PHOTOS)
The debt purchase will make the government Rex's principal secured creditor and it will seek to become a voting member on the committee of inspection.
No credible bidders were unearthed in an accelerated initial sale process in mid-2024 when the the company collapsed into administration with about $500 million in debts.
It is the second lifeline extended to the embattled airline in as many months, taking the government's total investment to about $130 million.
Late last year, the government provided an $80 million commercial loan to Rex's administrators to keep regional routes open, cover early entitlements for former workers and to guarantee tickets for regional routes.
In December, the corporate regulator announced it would take Rex and four directors to court over continuous disclosure breaches for failing to reveal a $35 million shortfall until days before the financial year ended.
The Australian Securities and Investments Commission is attempting to have four directors disqualified over alleged corporate governance failures.
The Transport Workers' Union said the $50 million debt buy-out was a relief to workers and the flying public, sending a clear message the federal government would not let the regional carrier fail.
"We know that Rex is a lifeline to regional Australia: essential for healthcare, tourism, business and connecting families," the union's national secretary Michael Kaine said.
"While today's announcement's is an important next step, the constant instability in aviation hurts businesses and it hurts communities.
"Without a long-term solution for Rex and for the broader aviation industry we're going to keep seeing a vicious cycling of failed airlines."
An October poll of 1044 Australians, conducted by YouGov and commissioned by the union, showed 75 per cent thought the government should get an equity stake when bailing out failing companies such as Rex.
Opposition transport spokeswoman Bridget McKenzie said the coalition supported the measures but criticised Ms King for not including her in plans to keep Rex flying.
"We have been calling for a more competitive aviation sector for the last three years, the government has been on the go slow," the Nationals senator told reporters in the regional NSW city of Nowra.
"I would welcome her approaching me to actually come up with and develop a bipartisan approach, rather than actually pushing off any decision as the $50 million does until after the election."
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