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Rex owes A$500 mln to 4,800 creditors

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Government may acquire Rex if no private buyer emerges

(Rewrites paragraph 1, adds details and background in

paragraphs 3,5,7 and 8 and analyst reaction in paragraphs 6 and

9)

By Rishav Chatterjee

Feb 20 (Reuters) - Australia's Regional Express

on Thursday said its administrators had begun a sale process for

the collapsed airline, over a week after the Labor government

indicated it could buy out the company if a private owner does

not emerge.

Regional Express Holdings (Rex) went into voluntary

administration in July 2024, resulting in hundreds of job losses

and the suspension of its Boeing 737 flights between

Australia's major cities. The airline continues to serve rural

areas with smaller turboprop planes.

The Australian airline sector has been under pressure in

recent years because of increased competition and price wars,

and Rex joined Virgin Australia and startup Bonza as the third

Australian airline to have entered voluntary administration

since 2020.

"We'd suspect that REX would not be in this position of

Administration if there was a more competitive airfare landscape

to begin with, notwithstanding the current pricing environment

has been artificially created by our elected officials," said

Jesse Moors, portfolio manager at Spatium Capital.

Rex currently owes A$500 million ($320 million) to 4,800

creditors after struggling to compete with Qantas and

Virgin Australia , which together dominate about 98%

of the domestic market.

Last week, the federal government suggested that if Rex

failed to secure a successful sale, the Commonwealth may step in

to acquire the airline. That could lead to taxpayers footing a

bill of hundreds of millions of dollars to replace Rex's aging

40-year-old fleet.

The government buying Rex would mark the first time the

state has owned an airline since Qantas was privatized in 1993.

"Especially given the criticism Qantas, in particular, has

faced recently for price gouging and not refunding Australians,

purchasing Rex might create a public conversation about

re-nationalising Qantas after its many public failures of late,"

Moors said.

The government in January said it would buy A$50 million of

debt from the company's largest creditor, Asian private equity

house PAG Asia Capital, to have more control during the

voluntary administration process.

($1 = 1.5780 Australian dollars)