How much bite does it have left?

9th August, 2024

On Tuesday 30 July 2024 Regional Express Holdings Limited (Administrators Appointed) (ACN 099 547 270) and a number of its subsidiaries (ASX: REX) (the Rex Group) entered voluntary administration.

Meanwhile, the operations of Pel-Air Aviation Pty Ltd (and associated entities) together with the Australian Airline Pilot Academy Pty Limited were not subject to the appointment of Administrators and were to remain under the control of their respective directors.

The initial update from its voluntary administrators, EY, included advice that:

  • Regional Saab 340 flights were currently unaffected by the administration and would continue to operate business as usual.
  • Domestic 737 services were grounded, however Virgin Australia has offered impacted Rex passengers the opportunity to re-book free of charge.

Since then, Virgin has announced it has received over 30,000 rebooking requests, reflecting in part the scale of the challenge now faced by Australian domestic travellers.

Much commentary has ensued, regarding how Rex’s expansion of its operations into the ‘Golden Triangle’ routes between Sydney, Melbourne and Brisbane may have contributed to its difficulties and as to what impact the domestic airline competition framework has played: see the article here.

Whatever the efficacy of these views (which will be the subject of analysis by the Rex Group voluntary administrators), there is an irony in that Rex’s growth was at least in part a result of the failure of another airline, Virgin Australia who has extended a lifeline to affected customers.

Virgin Australia went into voluntary administration in 2020 and had a binding sale agreement in place within several months, with a deed of company arrangement signed and then completed later in that year.

That deed of company arrangement dealt with a range of matters including:

  • payments to unsecured creditors;
  • customer travel credits and prepaid flights;
  • employment and entitlement issues;
  • Virgin’s Velocity Frequent Flyer program;
  • Retention of aircraft and equipment; and
  • Interim funding issues.

Whether or not a deed of company arrangement proposal emerges in relation to Rex remains to be seen.

The first creditors meeting for Rex was held today, with a further update to follow as the process unfolds from here.

Creditors who wish to obtain further information or assistance on how to participate in the voluntary administration process (or better understand their rights as creditors) should seek appropriate legal advice. MPH Lawyers can provide assistance to guide you through the process. Please contact Dan Butler or Mark Williams by email to dbutler@mphlawyers.com.au or mwilliams@mphlawyers.com.au or on (08) 9221 0033.

 

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