Rex’s desperate hunt for $10 million before airline’s collapse

In early May, Khotkar sent an email to Pan – who were both appointed by PAG – on Rex’s route performance, and observed the airline’s “load factor seems to have dropped more than the industry” and that April did not seem “to be showing significant improvement”. A high load factor, a key measure of profitability, indicates an airline has full planes with most seats occupied by passengers.

Days later, Lim, Sharp, Khotkar and Pan received Rex’s “Weekly Worm Report”, which showed the airline’s monthly passenger revenue in January, February, March and April was down compared with the previous year.

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ASIC has accused Lim of drafting and approving the statement released to the Australian Securities Exchange on February 28, 2023, and failing to take steps to ensure the market had accurate information. While Sharp, Pan and Khotkar are alleged to have become aware of the company’s finances from April 14 – when Lim sought the $10 million cash injection – but failed to inform investors, in a breach of their director duties.

Rex entered voluntary administration in July after its failed attempt to run flights between major capital cities, prompting the federal government to pour in an $80 million lifeline to keep operating regional routes, despite ASIC chair Joe Longo briefing Treasurer Jim Chalmers and Assistant Treasurer Stephen Jones about its investigation.

Rex shares lifted 1¢ to $1.51 after the February update and fell from $1.21 to $1.06 after the June 20 downgrade. The stock was trading at 57¢ when it entered into administration.

Sharp declined to comment while the court case was under way, but previously said he would be “vigorously” defending the matter and did not believe he breached regulations. A spokesman for Khotkar and Pan said the pair would be defending the allegations.

Lim and Rex administrators EY have been contacted for comment.

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