Rex rescued by $198 million government assistance package

Rex rescued by $198 million government assistance package

Australia's regional airlines will be kept in the sky after the Federal Government announced a $198 million Regional Air Network Assistance Package.

The new funding brings the total amount of money committed to the Australian aviation industry to $1 billion and will ensure regional airlines can continue to deliver critical services during the Covid-19 crisis.

The move follows a decision from the Australian Competition and Consumer Commission (ACCC) allowing Regional Express (ASX: REX) to coordinate flight schedules on 10 critical regional routes with Virgin Australia (ASX: VAH) and Qantas Airways (ASX:QAN).

Prior to the competition watchdog's interim ruling, which will enable the three carriers to share revenue from providing services on the routes, Rex had announced it would be cutting all passenger air services (except for those within Queensland).

The company says just before the Federal Government's announcement it had been preparing a media release to announce the total shutdown of its network and the standing down of 90 per cent of its staff. The company will now be able to continue operations in almost its entire network of 59 destinations and in the next two days will be presenting a new national network schedule.

Because of the package around 30 to 40 per cent of Rex's staff will be able to keep working during the downturn. 

"This package guarantees core routes for domestic air freight will remain open and essential workers remain employed, while providing vital financial support for airlines servicing regional and remote locations," said Deputy Prime Minister and Minister for Infrastructure, Transport and Regional Development Michael McCormack.

"More than 100 regional and remote airports received a scheduled passenger service last month and this funding will be welcome news for the aviation workforce and the broader communities these services support.

"The funding will ensure regional communities benefit from an ongoing airline service by underwriting airlines' operating costs on selected routes."

An additional $100 million is available to provide direct financial support to smaller regional airlines during this unprecedented downturn in aviation activity should it be needed.

Rex has welcomed the support package which it says will ensure critical and essential aviation services continue during the "worst operating conditions the industustry has ever seen".

"This meaningful assistance package not only seeks to keep essential air services going, but also tries to prevent the existing regional aviation providers from collapsing," says Rex deputy chairman John Sharp.

"With this assistance package, regional Australia can be sure that all previously sustainable regional operators will be able to spring back into business if the crisis dies down within the next six to nine months. With the network of regional aviation operators intact, not only will thousands of jobs be saved but regional communities can retain a minimum of vital air links which can be quickly expanded to assist the regional communities in their rebuilding efforts after the crisis."

Updated at 9.38am AEDT on 30 March 2020.

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