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Rex airline facing bankruptcy as stock halts trading

Published: (Updated: ) in Australian News by .

Rural airline Regional Express has been placed in a trading halt as the business faces tough decisions to stay afloat.

Regional Express is tipped to suffer crippling financial losses due to the coronavirus outbreak, with the regional airline informing shareholders it has entered a trading halt.

In an announcement to the ASX this morning, Regional Express Holdings Limited – known as REX Airlines – said it will not trade until Thursday pending an announcement.

It is not known what the announcement is or what will mean for the future of the airline.

In a letter seen by, Rex CEO Neville Howell asked Deputy Prime Minister Michael McCormack for a sovereign guarantee on loans to regional carriers if they were forced to collapse.

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"Australia will surely not be spared the carnage and Australian regional carriers will be the first to be impacted due to their limited financial resources,'' Mr Howell wrote.

"Rex does not believe that Rex, and all other regional carriers, will be able to pull through this crisis without significant assistance if the Health authorities' projections prove accurate.

"If regional carriers collapse, so will many regional communities for which the air service is their lifeline."

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Mr Howell asked for government assistance – not just for his business but for all regional airlines – in securing loans from the major banks if need be.

"Regional air carriers, by nature of the business they are in, usually have limited balance sheets,'' the letter said.

"In these unprecedented circumstances, they will need additional lines of credit from the banks which will be almost impossible to obtain.

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"Rex therefore calls on the Federal Government to provide a sovereign guarantee for any new line of credit or banking loan taken out with the banks to enable regional carriers to continue operations through to the end of the pandemic."

This morning Qantas announced it would have to slash 90 per cent of its international flights and ground 150 aircraft as the coronavirus outbreak takes a heavy toll on the airline's bottom line.

The move impacts Jetstar and investors believe as many as 20,000 Qantas staff will be asked to take unpaid leave to help save cash for the business.

Source: 9News

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