Yahoo Finance Collapsed airline racks up wild debt
Collapsed airline Rex owes two Western Australia local governments more than $800,000.
Regional Express, better known as Rex, went into voluntary administration at the end of July, grounding its Boeing 737 flights between capital cities.
Flights to and from regional cities on smaller planes have continued while administrators comb through the books and look for a buyer.
Ernst and Young administrators have since taken over the company.
The WA state government had reportedly last year renewed the airline’s rights to operate several flight routes between Perth to Esperance, Albany, Carnarvon and Monkey Mia until 2028, according to the ABC, however Rex allegedly owes Shire of Esperance and the City of Albany more than $800,000.
The Shire of Esperance told administrators they are owed $440,587 by the collapsed airline, while the City of Albany claimed it was owed $456,000.
The debts are over landing fees and other services, according to the ABC.
Total debts amassing $500m are also allegedly owed to more than 4,800 creditors. It is understood administrators have guaranteed payments from the time they took over.
The local governments are now pushing for further protections when it comes to future aviation agreements, similar to those in place at the City of Kalgoorlie-Boulder after Virgin Australia collapsed into voluntary administration in 2020.
The city was owed $921,777, and managed to get back $49,024.
A “stringent process” is reportedly now in place at the City of Kalgoorlie-Boulder to ensure payments are collected, with WA local governments hoping to follow in the City of Kalgoorlie-Boulder’s footsteps.
An Esperance Shire spokesperson told the ABC ratepayers could be impacted significantly by any loss of money to local governments, as the money was used for airport maintenance.
