The Federal Government will loan up to $80 million to troubled regional airlines, Rex Airlines.

This comes as administrators look to extend the company's administration period to mid-2025.

The government announced the life-line this morning, and will continue to guarantee flights until 30 June 2025 if the Federal Court approves the extension.

Rex will also pay entitlements to workers who have lost their job during the voluntary administration.

Samuel Freeman from administrator Ernst & Young Australia said the extension and funding will help secure Rex's commercial future.

“The extension we are requesting will help us to build a strong network for regional Australia, enabling us to continue to operate the regional network while undertaking a business improvement plan to reposition the business for sale,” Mr Freeman said.

“We’re planning to increase the size of the operational fleet, while providing greater clarity for the Rex team and investing in strategic growth initiatives.

“Through this plan, we’re looking to increase reliability and capacity on the regional routes.”

Last resort scheme

The government said it has also allowed former workers to access the Fair Entitlements Guarantee, a last resort scheme which compensates employees who have lost their job because their employer goes under.

 Rex went into voluntary administration in July this year.

The airline doesn't directly serve the Western Plains, although it runs flights from Sydney to Dubbo, from where other operators fly to smaller regional airports.

Bourke mayor Lachlan Ford said he is concerned that a lack of competition could discourage professionals from using that route to come to his shire.

"At the end of the day, it is about connectivity," Cr Ford said.

"The bush is a hard enough a place to get around as it is, and if we were left with only one airline flying out of Dubbo, the lack of competition, you would have to imagine, would drive prices up."

Mr Ford said he hopes the administration period would have Rex "back operating and financially sound."

The Federal Government said Rex had sold air ambulance service Pel-Air to Brisbane-based Toll Aviation. 

In a joint statement between Minister for Infrastructure, Transport, Regional Development and Local Government, Catherine King and Minister for Employment and Workplace Relations, Murray Watt, the ministers said their departments meet regularly with administrators.

"I encourage passengers to continue to support Rex’s regional operations," the statement said.

"Today’s announcement is another demonstration of our commitment to maintaining regional aviation access."