Troubled Rex Airlines is to sell aircraft spare parts in a desperate bid to keep the regional airline afloat

Rex Airlines is keen to sell off the company’s land, buildings and aircraft parts as administrators try to keep the financially troubled airline afloat.

Professional services firm EY Australia has been called in to rescue the five companies in the Rex Group after the airline grounded its Boeing 737 fleet on key urban routes.

Rex’s regional flights will continue thanks to continued funding from private equity firm PAG Asia Capital, as the airline desperately searches for a buyer or financial lifeline.

EY partner Samuel Freeman told an initial meeting of Rex creditors on Friday that the administrators had launched the asset sale program as part of the recovery efforts.

According to Freeman, industrial sites, company buildings, spare parts and even a flight simulator were all potentially available.

EY had also begun contacting “a large number of potential interested parties” to find a buyer or investor for the airline.

“Some companies are already in the process of signing disclosure agreements. There’s been a fair amount of interest, which is very positive,” Freeman said.

According to EY, the airline, which has a debt of about $500 million, is in daily discussions with the federal government about the situation.

Rex Airlines is looking to sell land, buildings and aircraft parts as administrators work to keep the airline afloat (pictured is a Rex Airlines plane in Sydney)

According to union representatives, they will support Rex as long as the priority is regional flights.

An initial investigation by EY found that competition in the domestic market for trunk routes was a major factor in the financial problems, Freeman said.

The airline has struggled to compete with major carriers Qantas and Virgin Australia on key capital city routes since an aggressive move in 2021.

According to the managers, there were also other causes: a shortage of pilots, which led to “suboptimal utilization of the fleet,” supply chain problems and maintenance issues.

The airline operates a fleet of old Saab 340 aircraft on regional routes.

There will be a second meeting of creditors, yet to be scheduled, where a vote will be taken on whether the Rex companies should return to existing management, be placed under a corporate arrangement, or be liquidated.

Founded in 2002, Rex is Australia’s largest independent regional airline, operating approximately 1,050 flights per week across 45 routes.