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In short:
Rex Airlines' administrators say pilot shortages and supply chain issues contributed to the business's $500 million debt.
Administrators say they are confident they will find a buyer for the regional carrier and have received several expressions of interest.
What's next?
A second creditors meeting is expected to be held in early September.
Administrators for collapsed regional carrier Rex Airlines say a shortage of pilots, supply chain issues and flights not being flown at capacity led to the company accruing more than $500 million in debt.
Rex was placed into voluntary administration at the end of July after days of speculation about the airline's future when it was placed into a trading halt on the Australian Securities Exchange (ASX).
To date, around 600 staff with the airline have been sacked, with the majority from its capital city routes.
The airline's regional business is unaffected by the administration process and continues to operate flights across rural and regional Australia.
While it is still too early for administrators to conclusively determine what caused the airline to collapse, there have been three main factors contributing to its substantial debt.
"Our investigations are ongoing there … but some preliminary observations are very much around the access to pilots, supply chain issues around engine parts in particular, and also the load factors on the 737 city domestic trunk route services," administrator Sam Freeman told The Business.
Rex first announced its expansion into capital city routes in 2020, before securing $150 million from private equity firm PAG to help fund the business, serviced by a fleet of up to 10 Boeing 737s.
Current and former employees of Rex have previously told the ABC that the 737s were often flown at less than half of their capacity, with some flights still operating with as few as 10 passengers on board.
Before entering administration, Rex has previously blamed pilot shortages for scaling back its services. Its submission to the federal government's Aviation Green Paper last year stated the airline had fallen prey to "pilot poaching", with the "vast majority" of its pilots being poached by Qantas and "to a lesser extent, Virgin".
Asked whether the airline had been trading while insolvent, Mr Freeman said administrators had not yet reached a conclusion.
"The administrators will be conducting investigations over the next few weeks that will include looking at the date from which the company might have become insolvent, and also if there is an insolvent trading claim," he said.
"That will be reported to creditors in our second report ahead of the meeting where they can determine the future of the company."
A sales process for Rex began last Friday, and Mr Freeman said administrators were confident that a buyer would be found.
"There has been a really significant amount of buyers reaching out since day one of the administration," he said.
"We've been really impressed with the interest, and many of whom are already engaged and getting access to the data room, and we expect there'll be a lot more activity there in the coming weeks."
Mr Freeman declined to comment on speculation that private equity firm PAG was among the interested parties.
"In a sales process, people become party to non-disclosure agreements while we walk through that … so we can't, at this stage, describe the individuals or groups that are involved," he said.
Mr Freeman said he expected the second creditors meeting to be held in the first week of September.
Is government support likely?
In the weeks since Rex was placed into administration, the federal government has reiterated its support for the airline and said it would evaluate "any proposals" to assist the business to ensure its regional and rural services continue.
However, Mr Freeman would not be drawn on whether the sale of the Rex business was likely to be dependent on a bailout from the federal government, or whether administrators were lobbying for government assistance.
"The business is being put forward as a Rex for the future, and buyers will look at that as they see fit," he said.
"But they [the government] are continuing to have an open dialogue with us around the administration, as you'd expect given its significance.
"Administrators are welcoming of support from all parties as we walk through this process with the stakeholders of Rex, but I can't comment on what that support might look like.
"As to how governments are involved in the process, that is entirely a question to put to government at this stage."
In a statement, a spokeswoman for Transport Minister Catherine King said the department remained in discussion with administrators.
"While it is too soon to comment on what support might look like, we are not ruling anything in or out," they said.
Mr Freeman added that regional flights were continuing, despite the Rex Group being in voluntary administration, and encouraged customers to book "with confidence".
"Since we were appointed, the regional network has operated without fault, and that's through a lot of hard work by the team here at Rex," he said.
"There's been more than 20,000 passengers in the first week of the voluntary administration alone.
"So, clearly, the business is functioning and doing exactly what it needs to do: getting passengers from all around the country to where they need to be in the regions."
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