Australian airline Rex will permanently abandon capital city services challenging Qantas Airways Ltd. and return to its roots as a small regional carrier in an attempt to emerge from administration as a viable business.

Administrators at Ernst & Young, who were appointed late Tuesday, have obtained support from Rex’s existing lenders and have funding to keep the airline’s regional flights going, Samuel Freeman, one of the administrators, said in an interview Wednesday. 

“The way forward is to keep that active and for us to run a structured sales process,” he said. There’s no future for Rex and its nine Boeing Co. 737s on intercity services such as flying between Sydney and Melbourne, Freeman said.

Asian private equity firm PAG, which helped bankroll Rex’s move into capital city services, said Wednesday it had provided interim bridging funding to help the airline trade out of administration and continue flying its regional routes. 

Rex, which mostly serves regional cities and remote townships, made its ill-fated foray into major intercity services in 2021. But stymied by a crippling fare war with Qantas and Virgin Australia Airlines Pty, and insufficient slots at Sydney Airport, Rex bled cash and its market share wallowed at just 5%. 

Administrators are seeking fresh capital or a buyer, pitching Rex as a regional airline with a fleet of propeller-driven aircraft. There should be a proposal on Rex’s future to put to creditors within five weeks, Freeman said.

Three factors appeared to contribute to Rex’s downfall, according to Freeman. Supply-chain issues affected the fleet of Saab 340s shuttling to rural destinations like Wagga Wagga, while Rex also struggled to find enough pilots and was hurt by inefficiency on its capital-city routes, he said.