Hundreds of Rex Airlines staff notified of termination after carrier enters voluntary administration

by Admin
August 1, 2024

In short:

Hundreds of Rex Airlines employees have been officially let go from the regional carrier after being told the business was “not viable”.

Workers were informed their jobs were at risk at an all-staff meeting on Wednesday.

What’s next?

Administrators will hold their first creditors’ meeting on August 9, when staff will receive an update on next steps.

Hundreds of Rex Airlines employees have been officially let go from the regional carrier after receiving formal notices of termination less than 48 hours after the company was placed into voluntary administration.

The airline grounded its services between major cities on Tuesday, before later appointing administrators from consulting firm Ernst & Young (EY) to oversee the business.

On Wednesday, Rex Airlines employees were informed at an all-staff meeting with administrators that 610 jobs were at risk — 360 from its capital city operations, and another 250 from its regional and rural carrier, Regional Express.

Rex’s regional services are continuing to operate.

Administrators told Rex Airlines staff on Wednesday that the business was not viable, and it could be weeks or months before they are paid their wages or receive redundancy packages.

A consultation process with staff began on Wednesday and employees began receiving termination notices that night.

It is understood 360 employees from its capital city operations have received the official notice after consultation ended on Wednesday, while the process continued for other parts of the business on Thursday.

Administrators are expected to provide an update on Friday.

The termination letter, obtained by the ABC, told staff the business would be wound up and their positions had been made redundant.

“After careful consideration, the administrators have reached the view that the company’s 737 operations must cease,” the letter states.

“I confirm that your employment with the company will terminate by reason of redundancy with payment in lieu of notice.

“Unfortunately, we have been unable to identify any suitable roles for your redeployment.

“The financial position of the company does not allow for the immediate payment of entitlements to you.”

With employees unable to be paid their entitlements, now-terminated staff are creditors of the company.

Administrators will hold their first creditors’ meeting on August 9, when staff will receive an update on the financial position of the business and next steps.

The timeline of Rex’s meetings with administrators

Along with the termination letter, Rex Airlines employees were provided a detailed creditors notice, which included an overview of EY’s involvement with the company in recent months.

Rex’s failed capital city ambitions saw the company losing $1 million a week.(ABC News: Laura Birch)

The document, obtained by the ABC, includes a list of meetings between EY and members of Rex as well as the board.

It confirms EY was requested by the company’s directors to conduct an independent review of the airline on May 9 and shows that the firm’s initial review was presented on May 20, in a meeting attended by then-chairman Lim Kim Hai and then-deputy chair John Sharp.

Follow-up meetings, referred to as the “second stage” of the business review, were held throughout June.

On June 4, a meeting between Rex directors and EY was described as a “walk through the second stage” of the business review.

A day later, EY met with Lincoln Pan, a partner at the private equity group PAG who joined Rex’s board as a non-executive director after it invested $150 million into the airline in 2021 to fund its capital city expansion.

The same day, Rex informed the ASX that it had parted ways with Mr Lim, and Mr Sharp was appointed as the company’s chair. Neville Howell was also named as the company’s chief executive.

Six more “project update” meetings were held before a “contingency planning” meeting was held on Friday, July 19 with representatives from EY, Rex’s directors and management.

The following Monday, EY met with Deloitte and representatives from PAG — including Mr Pan — for contingency planning.

On July 25, EY again met with PAG representatives and both Mr Pan and lawyers from White and Case were in attendance.

Another meeting was held the next day, attended by EY, Deloitte, Mr Howell and company secretary Richard Kwan.

On Monday, EY met with Mr Pan in his capacity as a PAG representative to discuss voluntary administration funding arrangements, before Rex chair John Sharp joined to discuss a “communications strategy”.

The last meeting was held on Tuesday, where Rex’s board was presented with a final report on the “financial position” of the company from EY — resulting in the business entering voluntary administration at 9:30pm.

Loading…