350 Rex Airlines employees stood down immediately as administrators warn staff are unlikely to be paid for ‘months’

by Admin
July 31, 2024

In short:

Administrators for Rex Airlines have told employees that the company is unable to pay their wages due to its “very perilous financial position”.

Around 350 workers have been immediately stood down from the airline, with 610 jobs expected to be made redundant.

What’s next?

A decision about the future of the airline’s capital city business is expected to be made by the end of the day.

Administrators overseeing the beleaguered Rex Airlines have told hundreds of employees they are unlikely to receive their wages or redundancy payouts for “months”, with services between capital cities being permanently cancelled.

Rex Airlines was placed into voluntary administration late on Tuesday after it entered a trading halt on the Australian Securities Exchange (ASX) on Monday, following days of speculation about the airline’s future.

Consultancy firm EY has been appointed to oversee the administration of the business, with administrators beginning their consultation with staff on Wednesday morning.

A recording of the meeting, sent to the ABC after it had concluded, heard administrators tell employees of Rex Airlines — the entity which operates the domestic routes between capital cities — that the business is in a “very perilous financial position and has access to almost no funds”.

“The business, to be very frank, is simply not viable, and administrators, after working very hard, have formed the view that [Rex Airlines] is not in a position to pay the wages of its employees moving forward,” administrator Justin Walsh told the meeting.

“Put simply, I guess the company is unable to meet the costs that it will need to incur to keep operating.

“With the business not operating and unlikely, almost certainly, not able to recommence operations in the future, it’s unfortunately the administrators view that the position of each of the staff of the company on this call needs to become redundant.

“The simple fact that I have access to insufficient funds to pay your wages, leaves the administrators with no choice but to conduct that consultation process over a very short period.”

Administrators have told Rex Airline employees the consultation period will end at 4pm on Wednesday — after which a decision will be made about the future of the airline and its staff.

A total of 360 people with Rex Airlines will be made redundant, with an additional 250 employees to be made redundant in its Regional Express division — which operates flights in regional and rural Australia — despite it remaining operational.

Rex’s regional flights are unaffected by the company entering administration.(AAP Image: James Gourley)

The ABC understands around 350 employees with Rex Airlines have already been stood down.

Asked when Rex will have the money to pay redundancy entitlements owed to staff, Mr Walsh said that process could take “months”.

“The answer is not presently, we’re working to find money, but certainly it does not have the capacity to do that today,” he said.

“If things go very well, we’re talking weeks, probably months before that happens.”

On Wednesday afternoon, Virgin Australia said it has received around 180 expressions of interest from Rex Airlines staff looking for job opportunities.

“We’re actively opening up opportunities wherever we can,” Virgin Australia CEO Jayne Hrdlicka told RN Drive.

Repossession of planes begins

Before entering administration, Rex Airlines operated 10 Boeing 737 aircraft on its inter-city routes, all of which were leased by the company.

It added the 10th aircraft to its fleet in December 2023, before another 737 was returned to its lessor to be turned into a freight plane — however it was later turned into scrap — leaving Rex with nine operational Boeing planes.

Administrators told employees on Wednesday that one of the planes has since been repossessed by its lessor.

Rex’s remaining fleet of Boeing 737s were grounded on Tuesday, and the ABC has been told that lessors have since blocked access to the aircraft because the company cannot make its lease payments.

At least one of Rex’s leased planes was been barricaded at Sydney Airport on Tuesday night.

In a separate meeting on Wednesday with Rex Airlines staff, administrators told employees they expect remaining lessors to repossess the remaining aircraft in the coming days.

One of Rex Airlines’ Boeing 737 aircraft was barricaded at Sydney Airport on Tuesday night.(Supplied)

The Boeing 737 is unable to leave its position on the tarmac at Sydney Airport.(Supplied)

Ms Hrdlicka confirmed that the airline was looking at acquiring three Boeing 737 aircraft from Rex’s leased fleet.

“We ‘re short three aircraft to serve the existing published schedules that we have in the next 18 months or so,” she told RN Drive.

“So we’re looking to bring in three aircraft, [which] will also give us a little bit of extra capacity in the event that the market grows faster than we’ve anticipated.

“That also gives us the ability to hire more of Rex’s employees and bring them back into well paying jobs and back into an industry that they love.”

Staff furious at ‘no communication’ from airline

Rex Airlines staff, unauthorised to speak publicly, have told the ABC that they learnt the company was being placed into administration by media reporting on Tuesday evening, and received communication from Virgin Australia at 11:17pm.

Staff received a text message from their employer at 11:30pm on Tuesday advising that an “important business announcement” would be made on Wednesday and to not turn up to work.

The message also included a link to a Microsoft Teams meeting for 9am on Wednesday, which was also sent to the personal email addresses of staff.

Furious crew members told the ABC they feel “gaslighted” and “blindsided” by their employer and are frustrated at the lack of communication from management, which they say is their “biggest issue”.

Posted 20 hours agoWed 31 Jul 2024 at 2:23am, updated 16 hours agoWed 31 Jul 2024 at 6:35am