Four Rex directors knew they were on-track for an eight-figure financial loss long before they walked back claims they were heading for profit, a court has been told.
Former Rex board members told investors they were confident in a strong financial result, despite being on-track for what ultimately was a more than $30 million loss, the corporate watchdog alleges.
The Australian Securities and Investments Commission is seeking penalties and disqualification orders against former executive chairman Lim Kim Hai, former chair John Sharp and directors Lincoln Pan and Siddharth Khotkar.
Rex released a market statement on February 28, 2023 claiming it was optimistic the company would post positive operating profits for the financial year, barring external shocks.
Despite incurring multiple operating losses in the months before, the statement was not corrected until June 20, 10 days before the financial year ended.
Rex adjusted its guidance to a $35 million loss before ultimately posting a $31.7 million pre-tax operational loss for the year.
The directors must have had some idea of the carrier's financial fortunes well before they informed the market, ASIC barrister Michael Borsky KC argued.
"That is untenable," Mr Borsky told the NSW Supreme Court hearing in Sydney.
"Mr Lim in particular, but all of them, knew the position much, much earlier and ought to have taken steps to correct or withdraw the unreasonable guidance well before the middle of June."
The commission's legal team noted there had been no external shocks to contribute to the result.
The initial profit claims were unreasonable given Rex only had five months to turn its early losses around, particularly given seasonal weakness for domestic carriers in the six months to July, ASIC argued.
"(Revenues were) essentially flat in the recent period and still way below where it needed to be to get back close to anything resembling break even," Mr Borsky said.
A separate breach of the airline's disclosure obligations, relating to the expansion from regional services into domestic operations, led to a $66,000 fine in 2021.
Rex fell into administration in 2024 with about $500 million in debt and was later snapped up by US aviation group Air T via administrators EY in October 2025.
The federal government extended the carrier an $80 million lifeline in late 2024, and bought $50 million of its debt from a major creditor to keep regional routes running.
Rex is Australia's largest independent regional airline, flying to 53 destinations across the nation.
The former directors' lawyers will outline their defences on Tuesday.
