By Renju José
SYDNEY (Reuters) – The Australian government said on Tuesday it would provide up to 80 million Australian dollars ($52.6 million) to airline Regional Express Holdings to help keep its regional routes running during an expanded voluntary administration process.
In July, Rex entered voluntary administration, Australia’s closest equivalent to Chapter 11 bankruptcy, eliminating hundreds of jobs and closing its subsidiary that operated Boeing (NYSE:) 737 flights between Australia’s major cities.
Traditionally focused on serving regional areas of Australia with small aircraft, Rex began flying larger aircraft on big city routes dominated by Qantas Airways and Virgin Australia in 2021, but has failed to reduce its market share.
The company has continued to use its fleet of aging Saab 340 turboprop aircraft for regional flights after calling in administrators.
The administrators of Ernst & Young Australia said they intended to apply to the court for an extension of the voluntary administration until June 30.
“The extension we have requested will help us build a strong network for regional Australia, allowing us to continue to operate the regional network while we undertake a business improvement plan to reposition the business for sale,” the administrators said in a release.
Regional company employees who have been made redundant during the voluntary administration period will receive their rights.
Government financial support and an extension of voluntary administration would help increase the number of operational aircraft, Ernst & Young said.
The government said the funding announced on Tuesday was “another demonstration of our commitment to maintaining access to regional aviation, recognizing the important role Rex plays in regional communities across Australia”.
The Transport Workers Union welcomed the government’s financial support and urged authorities to buy a stake in the airline to ensure regional routes and protect jobs.
($1 = 1.5214 Australian dollars)