The Qantas Airways Ltd (ASX: QAN) share price is catching some tailwinds today.
Shares in the S&P/ASX 200 Index (ASX: XJO) airline stock closed yesterday trading for $6.18. In morning trade on Wednesday, shares are changing hands for $6.24 apiece, up 1.0%.
For some context, the ASX 200 is up 0.4% at this same time.
This comes amid news that Regional Express Holdings Ltd (ASX: REX) has now officially entered administration.
Here's what we know.
Image source: Getty Images
Rex announces administrators
On Monday the Motley Fool reported that Rex had entered a trading halt pending a market announcement. That announcement was related to media speculation that Rex was in financial turmoil and headed for administration. The Qantas share price closed up 0.5% on the day.
Yesterday, Rex shares remained suspended as new media reports emerged suggesting Rex was likely to appoint Ernst & Young as administrators. The Qantas share price closed up 1.6% yesterday, even as the ASX 200 ended the day down 0.5%.
This morning, we learned that the latest media speculations were indeed correct.
Rex just released an announcement that it has entered into voluntary administration alongside its wholly owned subsidiaries. Ernst & Young Australia have been appointed administrators.
The airline's Regional Saab 340 flights are currently unaffected by the administration and will continue to operate.
However, flights between the major airports like Sydney, Melbourne and Brisbane have been cancelled. Rex's fleet of Boeing 737 aircraft are now all grounded.
Rex said that Virgin Australia will offer customers with an existing ticket on a flight cancelled due to the administration process the opportunity to transfer their ticket free of charge to any of 13 overlapping Virgin Australia services.
The ASX has now suspended Rex shares from trading.
The ASX stated:
ASX has determined REX's financial condition is not adequate to warrant the continued quotation of its securities and therefore does not comply with Listing Rule 12.2.
The securities will remain suspended until such time that ASX is satisfied with REX's compliance with the Listing Rules…
While the impact on Qantas' bottom line is unlikely to be material over the shorter term, with another Aussie airline following Bonza into administration in a matter of months, the Qantas share price could catch some updrafts.
Although Rex did not mention Qantas, the ASX 200 airline also reached out this morning to Rex's impacted customers and staff.
"This is a challenging day for our industry, and we are sad to see Rex enter voluntary administration with the immediate suspension of its Boeing 737 operations," Qantas stated.
Qantas continued:
Rex customers impacted by cancelled flights due to the grounding of their domestic jet services can contact Qantas and Jetstar to be reaccommodated on the same route as their original booking at no charge, where we have seats available…
We are also prepared to connect Rex employees with potential opportunities within the Qantas Group as they go through the process of voluntary administration.
Qantas share price snapshot
With the Qantas share price continuing its solid turnaround today, shares are now up just over 16% in 2024.
