NSW will not join a bailout of cash-strapped airline Rex, increasing pressure on the federal government to rescue the regional carrier.
The airline is about $500 million in debt and has launched an asset sale and buyer search in a desperate effort to stay in the air.
Administrators from professional services firm EY Australia have urged wary travellers to keep flying with Rex, but the carrier's long-term future remains unclear amid calls for federal government intervention.
The NSW-based company appears unlikely to receive backing from the state government, with Premier Chris Minns not wanting to disrupt progress on a support package.
Mr Minns restated the importance of Rex to NSW's regions and called on Canberra to keep the airline afloat.
"We fully acknowledge it is important for regional economies, it is important for the way they interact with Sydney … if those routes are cut then we've got major problems," he said on Monday.
"(But) the federal transport department, they're responsible for aviation policy .... too many cooks here could spoil the broth, and I don't want to be in a situation where we're adding to complexity."
EY partner Samuel Freeman on Monday said travellers could still be confident about booking on Rex while administrators were at the helm.
"We're saying to Australians, keep booking with Rex, the administrators are in control of the business and are overseeing its operations," he told ABC TV.
"We have demonstrated since the appointment that the Rex planes are getting people where they need to go to and we've secured funding to enable us to continue to do so in the administration period."
Since administrators took control, Rex has transported more than 20,000 passengers on 600 flights, he said.
A creditors' meeting on Friday was told the airline was in daily talks with government figures in Canberra, who have said they will back Rex as long as it prioritises regional flights.
Nearly 600 jobs at Rex have been axed and about 1000 more are in limbo amid uncertainty on the future of the carrier, which is a critical transport link for regional and remote communities.
The Transport Workers' Union, which represents Rex workers, wants the federal government to take an equity stake in the airline to secure at-risk jobs and shore up regional transport links.
Asked about Rex workers getting what they were owed, Mr Freeman said he expected the value of the airline would be "maximised" in a sale and employee entitlements would be addressed in that process.
A second creditors' meeting, yet to be scheduled, will include a vote on whether to return the Rex companies to the existing board, place them under a deed of company arrangement or liquidate.
The airline got into financial distress after an aggressive move in 2021 to compete on key capital-city routes against majors Qantas and Virgin Australia.
Other contributors were a shortage of pilots that created "sub-optimal fleet utilisation", supply chain issues and maintenance problems, according to the administrators.
The airline operates a fleet of ageing Saab 340 aircraft on regional routes.
Formed in 2002, Rex is Australia's largest independent regional airline and makes about 1050 flights a week on 45 routes.
