There's a saying in the aviation business: when things go wrong, they go wrong very quickly.

The same can be said of Rex.

After almost two decades as a successful regional airline, it decided to take on the industry's big two: Qantas and Virgin.

The bold move was supposed to give Australians more options and lower airfares — and for a time it did.

Barely three years later, bleeding cash and with its board at loggerheads, the airline went into voluntary administration, leaving hundreds of people out of work. Now its future hangs in the balance.

The story of this failure includes accusations of stolen planes, "unhinged" behaviour, and the "ruthless" game that is the aviation industry.

The two men who built the airline and ran it for almost 20 years are no longer on speaking terms, but in exclusive interviews with Four Corners, tell the inside story of Rex's downfall, and just who they believe is to blame.

'Lim bombs'

The year was 2002. Plucky upstart Virgin Blue had entered Australia's domestic aviation market with great success despite the headwinds brought by September 11 and the spread of SARS.

Veteran carrier Ansett struggled against the newcomer and collapsed into voluntary administration after more than 65 years in the skies.

A consortium of Singaporean and Australian investors bought up Ansett's regional routes, which were flown under the banners of Kendell and Hazelton. The two airlines became Regional Express, or Rex, with Singaporean businessmen Lim Kim Hai and Lee Thian Soo as its two biggest shareholders. Lim was appointed executive chairman in 2003.

"I didn't know anything about airlines. If I did, I wouldn't have gotten involved."

Lim had a hand in every aspect of Rex's business – and made it clear when he wasn't happy with the actions of his staff.

Former general manager of safety and compliance Russell Higgins once received an email from Lim reminding him to be more careful after he printed a presentation in colour instead of black and white.

"He liked to send messages to staff that he's aware of everything that's going on," Higgins said.

Staff dubbed Lim's more pointed feedback emails "Lim bombs".

"[His] management style was, I would say … autocratic. I think he believed that he knew more than anyone."

Regional councils have also been on the receiving end of "Lim bombs". When Dubbo council announced a $1.99 fee increase to help fund airport upgrades, Rex sent letters signed by Lim to 16,000 homes calling the council "either very corrupt or very incompetent" and threatening to stop flying to the city.

Last year, the airline pulled out of the South Australian town of Whyalla after it introduced security screening fees, but not before issuing a statement labelling the council "devious and underhanded".

Four Corners put to Lim that he had been described by people who had dealt with him as a micromanager, strategist, sometimes rude, successful, unhinged and generous.

"I tend to agree to all the adjectives," he said.

"The reason why I managed to be successful is because some of these so-called unhinged decisions are decisions that most people wouldn't make.

"Rex had an impeccable record, both in terms of its operations and in terms of its financial capability. So obviously I did something right for over 20 years."

In 2020, one bold decision made by his board would put that success at risk.

Backfire and blame

With coronavirus threatening the future of major carrier Virgin, Rex's board saw an opportunity to get a slice of the lucrative capital city market.

The regional airline leased jets and in 2021 started flying routes like Sydney to Melbourne.

Former Rex deputy chairman John Sharp, who was transport minister in the Howard government, said it was a "once-in-a-lifetime moment".

"We felt that here's a chance, it's the right moment, and if we are successful … people will thank us for actually having the gumption to get up and have a go and to provide competition to Qantas," Sharp said.

"Now clearly, as history shows, that didn't work to the way we wanted it to."

Rex's first Melbourne to Sydney flight took off in 2021. By the second half of 2023, it was losing almost $1 million a week.

There is one thing Lim and Sharp agree on: the conduct of Qantas harmed Rex's chances of making it in the domestic market.

Data from analytics firm OAG Aviation shows that when the regional carrier entered intercity routes, Qantas increased the number of seats available with low-cost subsidiary Jetstar. The flying kangaroo also moved into 10 of Rex's regional routes.

"Without the profits from the regional, with domestic just starting off and obviously loss-making, there's just no way to make it."

Sharp agreed: "What I don't think we had taken into account was the vindictiveness of Qantas who decided, 'Right, OK, we are going to really teach Rex a lesson.'

"They did it ruthlessly, and they were successful."

In response to questions from Four Corners, Qantas denied targeting Rex. It said Jetstar offered more seats because it had new, bigger aircraft and to keep up with demand. Qantas said regional routes were added to its network to support an increase in domestic tourism when international borders were closed.

"We welcome competition. We know the benefits of increased choice and frequencies it can bring, especially in regional communities," the airline said in a statement.

It's at this point Lim and Sharp's accounts begin to diverge.

As Lim's deputy of almost 20 years, Sharp has long appeared loyal, but has now distanced himself from how the boss did business.

He blamed Lim for Rex failing to change strategy when it became clear it faced tough competition, acknowledging the airline's domestic operations weren't effectively marketed.

"The buck has to stop somewhere and it obviously has to stop at the top," Sharp said.

"[Lim] was at the top."

Lim argued marketing was not necessary in a sector with so few options.

"It is a domestic market where there are three or probably four other choices and people are savvy enough to know," he said.

Tensions between Lim and the board started to mount. In the background, the ASX was demanding answers on a potential conflict of interest related to Lim's interest in Rex subsidiary National Jet Express. Now, ASIC is investigating the board for corporate governance issues relating to its financial reporting obligations.

Sharp said it wasn't until February this year that the board became aware of just how bad Rex's financial situation was. After that, things turned from bleak to bizarre.

The missing planes

In March, Rex's board directors received a legal letter accusing the airline of stealing planes for parts from an aircraft holding facility in Arizona.

The matter is now in the New South Wales Supreme Court. In court filings, US company Jet Midwest alleged that Rex purchased four aircraft for a total of $US2 million in 2019.

The aircraft service provider alleged that in 2020, after paying only a $US200,000 deposit, Rex arranged to have the aircraft disassembled by an intermediary and some parts shipped to Australia.

Four Corners has obtained a shipping receipt showing engines and propellers were destined for the Rex base at Wagga Wagga.

Lim said Rex did not steal the aircraft, but said it was appropriate that the matter play out in court.

"When you accuse somebody of theft, it must mean that I come without your knowledge to take something from you," Lim said.

"How do you do that in broad daylight over several weeks on an aircraft? They're so big."

Sharp said he was unaware of the situation involving the planes until the board received a legal threat earlier this year.

"That was the straw, or one of the straws, that broke the camel's back," Sharp said.

He denied the Rex board had been asleep at the wheel.

"I think the evidence of that is the fact that when it came to a point where we realised there was a problem, the board stood up and said, 'Well, we have to fix this,'" he said.

Lim was dumped from his position as executive board chairman in June.

The matter was quietly announced with a statement to the ASX thanking Lim for his service. It was an extraordinary ending to 21 years at the top.

But the fight was not yet over.

Torpedoed plans

Within weeks, Lim was plotting his return. In his capacity as a shareholder, he sought a meeting to overthrow the bulk of the board and replace the men with new picks.

In the meantime, with Lim out of the picture, Sharp said members from the existing Rex board started work on what he dubbed a rescue package.

The plan was to try to sell Rex's intercity operations – its aircraft, its staff and the tickets it had sold – to Virgin. The strategy was not without irony; when Rex started flying between cities, some jets still had Virgin's red and purple leathers in their interiors.

But the planned sell-off did not proceed. Sharp said he believed if the deal had gone through it would have saved the airline from voluntary administration and protected more than 600 jobs.

While it is not clear why Virgin did not pursue the proposal — the airline and its funder Bain declined to comment on the negotiations — Sharp blamed Lim.

"We had got to a point where that was pretty much done, and then it got torpedoed," Sharp said.

Lim, who personally holds nearly 17 per cent of Rex shares and is connected to people with smaller shareholdings, did not deny he had tried to get involved.

He said he made it clear to the Virgin and Bain heads that he needed to be part of the discussion to support whatever was on the table.

"I said that if I'm involved then that's fine," Lim said.

"If I'm not involved, then you need to know that you run the risk that the shareholders may not approve it."

Without a lifeline, Rex entered voluntary administration.

Rex regrets?

After a buoyant start to the year for Australia's domestic passengers – with lower airfares, reduced cancellations and improved on-time flight rates — the Australian Competition and Consumer Commission has warned that Rex's exit may mean consumers lose out.

The airline remains in the hands of Ernst and Young administrators, who have kept the regional routes flying while hunting for someone to buy it.

Sharp has said he hoped to be involved in the Rex of the future. Lim told Four Corners he was interested in parts of the business unrelated to its regional operations.

He has few regrets about his stewardship of the airline over the past 21 years.

"I would say that certainly, I've made some bad decisions, but I think the batting average is not too bad in the lead-up to COVID," Lim said.

"Some of the same people who would today be accusing me of various bad things are the same ones that have stuck by me since 2005 and before.

Watch Four Corners' full investigation, Flight Club, tonight from 8:30pm on ABC TV and ABC iview.