The carrier's expansion into major city routes has been questioned by the prime minister as concerns mount about its fate.
Anthony Albanese said he would consider proposals to save the company, but added Rex received substantial public funding with "no conditions attached".
"One of the things I expressed concern about was having no conditions so Rex, for example, moved away from their traditional role of being a regional airline into flights, for example, from Sydney to Melbourne," Mr Albanese told reporters.
A trading halt followed reports Rex called in consultancy firm Deloitte to review its books. (Luis Ascui/AAP PHOTOS)
Rex began servicing Sydney-to-Melbourne, one of the busiest routes in the world, in 2021.
Rex's website showed no available flights between the capital cities from Wednesday.
"Rex, as a regional airline, provides important links with regional communities, and particularly between capital and regional communities (which) is important for those local economies," Mr Albanese said.
"We want to see the aviation industry in Australia continue to be one that provides services and access."
Regional Express' shares went into a trading halt on the Australian stock exchange following recent boardroom turbulence and multimillion-dollar earnings losses.
An announcement is expected by the opening of trade on Wednesday.
"It isn't appropriate for us to make any further comments," a Rex spokesperson told AAP.
The trading halt followed reports Rex called in consultancy firm Deloitte to review the airline's books.
Shares in Rex have been falling as the airlines battles rising costs. (Dean Lewins/AAP PHOTOS)
The Australian reported the Rex board was awaiting a report from consultancy firm EY.
Transport Minister Catherine King said the government was in contact with the airline.
"Regional aviation is incredibly important ... aviation is a pretty tough business, and we're seeing that," she told ABC News.
"Obviously we saw that with Bonza folding. We don't want to see Rex fold as well, so we're keeping a fairly close eye on it."
Rex employs about 2000 people.
Nationals senator Bridget McKenzie said Rex launching flights, including a recent Melbourne-to-Perth route, inspired competition with major aviation players which often resulted in cheaper fares.
"Let's not continue to pretend that Qantas's behaviour is acceptable in the aviation industry," Senator McKenzie said.
"Every time they are challenged they seek to monster those airlines like Rex ... who have sought to actually give Australians another way of travelling."
The PM protection racket for Qantas continues, as he suggests any support for Rex ✈️will be conditional on Rex withdrawing domestic services between capital cities— Senator The Hon. Bridget McKenzie (@senbmckenzie) July 30, 2024
Unlike Bonza, which went into voluntary administration in April, Rex mainly owns rather than leases its planes.
Its key fleet comprises 61 SAAB 340s and seven leased Boeing 737-800s, out of 123 aircraft.
Many regional communities rely on the carrier, which emerged 22 years ago following the collapse of Ansett.
In the central west NSW hub of Orange, Mayor Jason Hamling said he was grateful his community had multiple carriers including Qantaslink and Link Airways.
Since COVID-19, Rex has struggled with profitability. In February, it reported a bottom line net loss of $3.2 million for the first half of the 2023/24 financial year.
Rex shares last traded at 56.5 cents on Friday. They were at 79 cents a month ago.
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