By Alex Mitchell and Jack Gramenz in Sydney

Embattled airline Regional Express could be handed a government lifeline as two other carriers step up to help thousands of customers scrambling to find replacement flights.

All Rex flights between major-city airports were cancelled after the financially struggling carrier entered voluntary administration on Tuesday night as it looked for investors or a buyer to continue its regional operations.

But Transport Minister Catherine King has pledged to work closely with administrators EY to ensure the airline maintains its flights outside capital cities, describing it as vital to many regional communities.

Around one-third of the airline’s 2000 employees are expected to lose their jobs with the end of major-city operations, the Transport Workers Union has said citing estimates from administrators.

Regional flights have continued to run after the EY appointment, while rival airlines Virgin Australia and Qantas have chipped in to help customers booked on capital-city routes onto alternate flights.

The administrators on Wednesday said they were confident the airline’s status as a key regional carrier would continue, while also indicating Virgin had expressed an interest in taking on a number of Rex’s grounded Boeing 737s from axed major routes.

Ms King did not rule out the possibility of a government bailout when quizzed on the prospect, although she said no figures had been discussed about the levels of federal funding that could be involved in an aid package.

“The first thing we are interested in doing is hearing from the administrators about what is needed in order to make sure the regional aviation Rex is providing continues,” she said.

“The government will act expeditiously … it is a complex situation with multiple commercial arrangements in place, but we do stand ready to work very closely with the administrators, because that regional presence is absolutely vital.”

The Rex board has appointed Samuel Freeman, Justin Walsh and Adam Nikitins of EY Australia as joint administrators.

Mr Freeman forecast a “relatively short” administration period before new investment took the business forward.

“There has been a groundswell of support for the Rex business since our appointment… there’s a great prospect there is a future for Rex, and it’s a strong likelihood it will be delivering services to the people of regional Australia,” he told ABC Radio.

Rex and Virgin Australia are exploring ways to support regional customers, including Virgin selling Rex’s regional services through codeshare or interline arrangements, and making Virgin frequent-flyer benefits available.

The TWU has called for the federal government to buy an equity stake in Rex to minimise job losses and protect regional Australia.

“This is another dark day for aviation, with over 600 families faced with sudden joblessness in an industry that has taken hit after hit,” TWU national secretary Michael Kaine said.

“The focus now must be on maximising jobs, protecting regional routes, securing redeployment opportunities to other aviation businesses and ensuring entitlements are paid as soon as possible.”

By early Wednesday morning, nearly 5000 Rex customers had contacted Virgin for a free transfer.

Virgin Australia has offered passengers scheduled for Rex domestic 737 services free rebooking. (Luis Ascui/AAP PHOTOS)

Many regional communities rely on the carrier, which emerged 22 years ago following the collapse of Ansett.

Unlike Bonza, which went into voluntary administration in April, Rex mainly owns rather than leases its planes.

Rex’s key fleet includes 61 SAAB 340s and seven leased Boeing 737-800s out of 123 aircraft.

Rex shares were suspended from trade on Wednesday after earlier being placed in a trading halt amid speculation that administrators would be called in.

It has struggled with profitability since aggressively expanding to compete on capital-city routes against the dominant domestic operators, Qantas and Virgin, after the pandemic.

In February, it reported a net loss of $3.2 million for the first half of the 2023/24 financial year.

‘It’s everything’: rural Australians fear Rex’s fate