Chris O'Keefe clashes with Rex administrator as staff goes unpaid 11:54

Okay, Regional Express, or REX, it's $500 million in debt. It owes money to almost 5,000 creditors, including hundreds of staff that it unceremoniously sacked. 594 staff, to be exact, and many have been told it will take months for them to be paid their severances, their leave entitlements. They don't know when they're going to get it.

Now, all of this mess was created by a board and management of Regional Express who thought that they could take on Qantas on capital city routes. And former Federal Minister and Chair of REX, John Sharp. He was happy to spruik REX, wasn't he? On this program especially, wherever he could. Yet when it all went to custard, he has kept his head well below the parapet. And that is very cowardly, in my opinion, especially the consequence...

The human consequence of what this has done to Rex staff and Rex creditors. There are a group of Singaporeans and some other aviation types on the board, and they should, quite frankly, be ashamed of themselves too. Because this is their stuff up writ large. But you know what makes me the most aggrieved about this entire process? The CEO of Rex is a bloke by the name of Neville Howell.

And Neville, he's in charge of the day-to-day massacre of the airline, in my opinion. Yet just six days before the airline slipped into administration, Neville somehow magically had his termination period changed from five weeks to 12 months, payable in the event he was sacked. So six days before it goes into administration, he convinces the board, old Neville Howe,

that he should be paid 12 months salary in the instance he should be sacked. Hello? Honestly, how the hell do these people get away with such disgusting behaviour? These are the same people who are withholding staff entitlements from the staff that they sacked on the spot, 600 of them.

Look, regardless, the airline needs to be sold. It needs to be cleaned up because regional routes are just too important to country Australia. So Sam Freeman, he's working for the administrators at EY and he's on the line for us. Sam, g'day. G'day, how are you doing? I'm not too bad. Neville Howe, will he be sacked?

Mr Howell is working with the administrators. He's the holder of the AOC for the airline and will continue to be here during the administration so that we can keep the regional airline operational and doing what it's been doing since the administration commenced and that's moving people around the country to the regions. Sure. Do you think Neville's pulled a Swifty here?

Look, I can't speak to what happened before our appointment. Obviously, our investigations into the affairs of the company are ongoing. But I do think when you look at people in a business that hold licenses, it's not unusual for those people to have long periods of notice so that you have a suitable amount of time just to cure a replacement. Right. Six days before it goes into administration, you're expecting us to believe that was a coincidence?

Well, I mean, I can't speak to the negotiations between the board and Mr Howe. I'm simply saying that in a normal situation, it's not unusual for a longer, you know, to have a longer period with key execs to enable you to replace them when they hold a licence. Is this normal circumstances, six days before administration? Yeah, I mean, I'm not talking to what happened in the lead-up there because I wasn't a party to those discussions, Chris. But you know, don't you, Sam?

You know what I mean. No, Chris, I don't know. No, I don't. You've got no idea. As the administrator from EY who's looking to sell Rex, you have no idea how Neville Howell, who's still the CEO, changed his termination period to 12 months. Payable if he was sacked. Six days before he went into administration. We're in the process of investigations into the affairs of the company, Chris, which we'll report to people. And I wasn't a party to those discussions. Sure, but you figured it out. You figured it out by now, though, haven't you?

Well, I've considered what we need to keep the airline operating and delivering the service to regional Australians and secure the future for Rex so that we can continue to do that. And in order to do that, I need to keep an airline operational and flying. And you think that Neville Howe is someone who deserves to be there?

I think the bottom line is that we need a CEO that can support the AOC while we find a new buyer to come in and see Rex move forward. Since the appointment of the administrators, more than 6,000 people have flown on Rex around New South Wales alone. That's good. It's an incredibly important part of the country. That's good. And 600 loyal staff were left without a job and without their legal entitlements.

Yeah, and that's a really, really hard position for those people to be in. I do really empathise with them. Do you think Neville empathises with them? Absolutely. I think all of the people who've remained on it, Rex empathised with them. Neville doesn't empathise with them, Sam. Otherwise he wouldn't have changed his entitlements to 12 months, would he?

Well, I can't speak to other people's views. But you'll keep him on? Well, what I want to do, Chris, is keep the airline flying so that those 20,000 people that flew around Australia on Rex in the first week can keep doing that while I look for someone who can help us secure the future for Rex and take it forward. Okay. So given staff were sacked, 600 of them in the middle of their pay cycle, they were not paid for some of the work that they actually completed. Will they be reimbursed for this?

So every person who's worked during the period of the administration has been paid their wages for the time they've worked under the administrator's control and that will continue to be the case. Prior to the administrator's control?

There will be entitlements outstanding for people who've been made redundant and they'll be addressed through either a data company arrangement or the safety net from the government that's their entitlement guarantee. And the CEO who oversaw it, he's tickety-boo, no worries, still in charge. Now, was the company trading insolvent before it slipped into administration?

And that's a key factor we're investigating, the date of insolvency and whether or not insolvent trading was undertaken here at Rex. And that's something that we will report to creditors in our report before they decide on the future. Because there is potentially ASIC should be involved if that was the case, right? Well, it's a standard part of administration for us to undertake that investigation. We'll certainly do it.

And we will certainly report to creditors so they can make an informed decision as to what should happen. Are you aware that some staff had income insurance paid by Rex as part of their salary package, yet those premiums went unpaid back in May? I'm not aware of that, Chris, and I can look into it. Thank you for bringing it to my attention. Because I think that might be a little bit of evidence at the company that Neville Howell,

They might have been training insolvent. Now, why should Australians put their trust in Rex and its executives who let 100,000 passengers scrambling to rebook domestic flights and were responsible for 600 employees losing their jobs with no pay and entitlements? How can Australians trust that Rex, with a sale or not a sale, will be in good hands under the stewardship of CEO Neville Howe?

Well, I think at the present point, Chris, the business is under the control of an independent administrator who is overseeing the operations and working with the staff to see those operations continue. And the evidence is, in fact, in that 20,000 people have flown around the country on RECs in the first week of administration. What we need to do is we do need people to continue to book with RECs.

they should have the confidence that an administrator is here and is independent and is overseeing it because ultimately to secure the future of Rex, we need to see the airline continue to do what it does. The last thing we want to see is Rex not in the air. Has John Sharp or any of the Singaporeans or any of the people that made any of the decisions been held accountable for their management?

Well, part of the investigations undertaken by any administrator is to look at the affairs of the company, which includes looking at all the duties of the parties involved and commenting on that. Is it the truth that you're keeping CEO Neville Howell because you can't find any other CEOs to run a regional airline with an ageing fleet, dozens of aircraft grounded, huge spare parts issues and a shortage of pilots to fly at the Saabs? No one else will do it, Sam.

Look, Chris, we are running an airline business here and what I'm here to tell you is we're going to continue to do that, but we need the support of Australians to keep flying wrecks while we do that. Do you think that the Australians should give you support after Neville Howe negotiated six days before, and I'll keep saying it, negotiated six days before he slipped into administration?

a juiced up contract of 12 months payable and 600 of the staff are left without a job and without entitlements. We're talking about morality and ethics here, Sam. Why should Australians jump on board wrecks if that's how you treat people? This is not a question about a CEO. This is a question about Australians and a regional airline. It's a question about morals and ethics. That's what it's a question of, Sam.

But does Australia need RECS to move the people around to the regions? And what my job is, is to independently assess the position that RECS is in and to look for a pathway to secure its future.

And we've already commenced the sales process. We're looking for a party to come in to help secure and recapitalise the business because the Rex network and where it flies is so incredibly important to so many Australians. And that's one thing I've been told to no end by lots of Australians in the last two weeks. And, Sam, what about the families of the 600 staff who are waiting on their entitlements and their pay? Like, I don't want to carp on about it, but that is a reprehensible way to treat people. Yeah.

The best way for me to achieve an outcome here is to maximize the number, the value of this business. Because what that does is it makes sure that the best possible return can get to everybody, all the creditors, all the employees. And so that's why keeping this airline in the air, doing what it's done in the last two weeks, thanks to the fantastic staff that are still here, is absolutely my priority. Sam, you're sacking more of them this week, aren't you?

We are in an administration process where we are looking at everything that is going on to make sure that this business is set up for success into the future. How many are sacking this week, Sam? Of those wonderful staff? We'll continue to work with all the staff here as we work through the administration process and move towards what hopefully will be a REX set up to succeed into the future. 100, 200, 300? How many are going?

Chris, in the event that anything further is to change, then we will absolutely be talking with staff in the first instance. Okay. Is it true that the CEO and Rex management are informing you guys, the administrator, on who's on the list and who's off the list to be sacked?

Chris, we're working really closely with a number of stakeholders around the whole group, and everyone is working incredibly hard to ensure that the airline is here into the future in a sustainable way. Hey, Sam, if I was buying Rex and if the people who are negotiating the sale process right now are listening to this interview, I would be running away quick smart. You need to pay your people. That's just how it goes. I appreciate you coming on. That's Sam Freeman, obviously, from EY.