Background: Rex is the Aussie airline that links regional towns like Dubbo, Wagga Wagga, and Broken Hill to major cities. In 2024, it fell into voluntary administration after trying (and failing) to compete with Qantas and Virgin on capital city routes, racking up massive debts in the process.

What happened: After 15 months in administration, a US aviation company called Air T has agreed to buy Rex, with final terms expected this week. Air T operates FedEx flights and charter services across the US.

What else: It’s not exactly smooth flying... Most of Rex’s creditors, including the federal government, aren’t expected to be repaid under the deal. Still, the government understands how tough it is to find a buyer for an airline with such asset-specific risks.

What's the key learning?

💡Asset-specific risk is when a company’s value is heavily tied to equipment or technology that can’t easily be replaced.

💡For Rex, that’s a huge problem because its fleet of 57 Saab 340 planes is on average more than 31 years old, and since Saab no longer makes them, sourcing parts and maintenance is a nightmare.

💡Air T has the facilities and spare parts to keep Rex’s planes in the air, but since there were no competing bidders, it’s safe to assume they got the airline for a bargain.