Shares in Australian regional carrier Rex Airlines (Rex) have been suspended amid rumors that financial services firm Deloitte is to be appointed to assist in turning around the crisis-hit airline.
Shares were suspended in the airline as the Australian Stock Exchange (ASX) opened for trading on July 29, 2024, as the carrier attempts to find a route through internal tensions engulfing its senior leadership team and other financial pressures.
Earlier in July 2024, the former Chairman of Rex reportedly sought to eject the company’s entire board a month after being voted out of his role. Singaporean businessman Lim Kim Hai was one of the founding shareholders and directors of Rex in 2002.
In early June 2024, Lim stepped down from his role as Executive Chairman but remained as a Non-Executive Director and major company shareholder. Lim then handed operations over to Rex’s Chief Operating Officer, Neville Howell.
On July 12, 2024, the airline informed investors that Lim had called for a shareholder meeting to remove four of his five fellow directors and appoint two others. According to the Financial Review publication, the only director Lim did not ask to be removed was Lincoln Pan, the nominee of PAG Asia Capital, a major private equity firm that has provided AU 150 million ($101 million) in funding to the airline.
Confirmation of the temporary suspension of trading in Rex shares was made via an announcement made to the ASX at 09:50 local time on July 29, 2024. The message directly referenced a news report made in The Australian’s Margin Call column that reported tensions among its directors had led Rex to appoint financial services firm Deloitte for advice in navigating a way out of the crisis.
“Rex requests the securities of the company to be placed in an immediate trading half pending a material announcement in relation to a news article published on Saturday, July 27, 2024,” the statement said. “Rex advises the trading halt is to last until the commencement of trade on Wednesday, July 31, or until the announcement mentioned above has been made.”
According to sources, the trading suspension will remain in place until Rex announces a resolution to the current management impasse. According to a report published by Australian Aviation, an airline spokesperson said: “The company is currently in an ASX trading halt pending making a material announcement. Accordingly, in the meantime, it isn’t appropriate for us to make any further comments until such an announcement is made.”
The suspension will heighten concerns regarding the financial health of the airline. Some of Deloitte’s specialisms include financial restructuring, administration, and insolvency services and as such, all eyes will be on any further announcement from the carrier as to what the immediate future may hold.
Any major shift by Rex could have far-reaching implications for regional aviation in Australia as well as the huge number of rural communities that rely on vital Rex-operated services to link them with larger towns and cities for business and leisure travel, sourcing healthcare services, and accessing other public services.
Originally starting life as Hazelton Airlines and acting as a regional feeder for Ansett Australia Airlines, the modern-day Rex operates a fleet of 57 Saab SF340B turboprops that serve regional and public service routes, plus nine Boeing 737-800s that ply trunk routes between the major cities in eastern Australia and recently began linking Adelaide and Perth on the west coast on June 29, 2024.
