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By Alasdair Pal
SYDNEY (Reuters) - The Australian government said on Wednesday it was open to acquiring collapsed airline Regional Express Holdings to ensure its regional services continue, in what would be the first state ownership of a carrier in the country in three decades.
Rex entered voluntary administration last July, cutting hundreds of jobs and grounding its Boeing 737 flights between Australia's major cities, though it continues to operate smaller turboprop services to and from rural areas after the government guaranteed the routes until June this year.
It owes about A$500 million ($314 million) to 4,800 creditors after failing to compete effectively with rivals Qantas Airways and Virgin Australia, which together control 98% of the domestic aviation market.
Australia's Prime Minister Anthony Albanese said the government still preferred a private sale of the airline, but it was open to taking a direct stake should a buyer fail to emerge.
"We're determined to make sure that regional communities are not left behind," Albanese told a press conference on Wednesday.
"If there is no sale, we will work on contingency plans with relevant state governments, including the potential for (government) acquisition."
Any nationalisation would be the first time the government would hold an equity stake in an airline since it finished privatising Qantas in 1995.
Albanese's centre-left Labor Party faces reelection in nationwide polls that must be held by May, and has been courting rural voters with additional funding across the country.
Vast distances between towns in Australia's interior and its main cities such as Sydney mean rural communities are reliant on regional flights provided by Rex for essential services, including specialist medical needs.
The government has already provided a loan of up to A$80 million to keep Rex's regional routes operating until June and last month acquired A$50 million of debt from the airline's largest creditor. ($1 = 1.5939 Australian dollars)
(Reporting by Alasdair Pal in Sydney; Editing by Jamie Freed)
