The Federal Government has thrown Rex Airlines another lifeline after taking on the embattled carrier’s $50 million debt from its largest creditor PAG Asia Capital.

Rex — or Regional Express Holdings — has been fighting for commercial survival after it grounded its high-cost fleet of Boeing 737 jets and called in administrators last July with more than $500m of debts.

The debt purchase, announced on Thursday, would ensure regional communities stay connected and keep access to essential medical and freight services.

“The Albanese Government is ensuring Rex Airlines regional services will continue, supporting the administrators on next steps,” Transport Minster Catherine King said in a joint statement with Finance Minister Katy Gallagher.

“By acquiring the debt, the Government will become the principal secured creditor and will seek to become a voting member of the Committee of Inspection.”

“These actions preserve important economic, medical and freight services, supporting regional liveability and regional economies.”

Rex’s administrators from Ernst & Young last year failed to find a buyer for the airline’s regional operations during the sales process.

Ms King told reporters separately on Thursday the announcement would allow EY to look for a buyer again.

“What this allows for is the administrators to undertake a second sale process which they will start the process of doing and we’re trying to make sure we provide that with every opportunity of success,” she said.

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