REX: a possible buyer for the ailing airline Regional Express

Consulting firm EY has the AU$10 million task of administering Regional Express (REX) since it went into administration. EY has also been trying to find a buyer for the airline. After over a year in administration and some courtroom dramas, it looks like REX might have finally found a buyer.

Who’s the buyer?

The AFR is reporting that Nasdaq-listed Air T, a US-based operator that runs FedEx cargo flights and some aircraft leasing and parts trading, has placed an offer for REX. Government ministers, including the PM are scrutinising the deal and it could be announced as early as Monday 22 September.

Air T is an odd candidate for a regional airline operator. As well as cargo services, it runs the aircraft boneyard at Kingman, Arizona. Yep, that’s the one famous for storing hundreds of retired planes. That could be handy, given that REX has a fleet made up of Saab 340 turboprops that nobody makes anymore, and for which parts are hard to come by.

A troubled fleet

Saab stopped making the 340s in the late 1990s. Spare parts are just plain rare usually cannibalised from other grounded aircraft. For an added complication, the Saabs use the same engines as US military Blackhawk helicopters. And the Pentagon, or as we are now meant to call it — The Department of War — gets priority.

Rex has been working with sometime competitor Link Airways, also a Saab operator, to share parts and servicing, but the viability of this strategy over time is regarded as shaky at best.

How we got here

Rex collapsed into administration in July 2024 after talks with Virgin Australia about a takeover fell apart. Singapore based private equity group PAG had withdrawn funding after earlier throwing AU$150 million behind Rex’s ill-fated attempt to take on Qantas and Virgin on capital city routes. It was a short battle which REX resoundingly lost. Of course regional politics came into play. To avoid Rex’s collapse before the 2025 Federal Election, the government spent AU$130 million of taxpayer money on a bailout.

The importance of REX

For travellers in small towns across NSW, SA and regional Queensland, Rex is often the only link. The airline runs a number of vital government-subsidised routes. But REX is not the only operator in some areas. Rival regionals like Link Airways have expressed interest in stepping up if Rex falters.

Governments love to say they’re supporting regional communities, but further subsidies will be a tough sell when Rex has already burned through millions. Expect some loud debate over whether propping up Rex really counts as “supporting competition” against Qantas and Virgin – especially when those airlines have all but abandoned regional flying themselves.

2PAXfly Takout

The sale of REX to a new operator raises all sorts of questions. Will they replace the outdated, obsolete Saab fleet? Air-T will need to invest a lot in newer turboprops like ATR-42s, unless it has a secret supply of Saab parts. It’s quite likely Air-T will want some sort of government guarantee if it plans to buy new aircraft, and that won’t go down well with other competing industry players. Finally, any dramatic changes to regional airline routes and operators make country communities nervous. They will worry that they will lose their air connection to other regional centres and capital cities.

The challenge will be for Air-T or any other purchaser to prove that REX is a viable airline, and not a dying dinosaur.