Qantas suffered a blow yesterday when the Australian Prime Minister Tony Abbott ruled out guaranteeing its debt, but instead proposed lifting restrictions on foreign investment in the airline.
The government said it will seek to amend the 1992 Qantas Sale Act, which caps foreign ownership at 49% and forces the airline to keep the majority of its operations in the country.
In response, Qantas said in a statement that the changes to the Act have only a "limited chance" of getting through the Senate as they will lead to the airline shifting jobs overseas.
However, rival Virgin Australia welcomed the Government’s decision not to extend a debt guarantee to the country’s national airline, for which Qantas CEO Alan Joyce had been lobbying since November.
Joyce has accused Virgin Australia of using foreign state-aid, injected into the airline from carriers owned by foreign governments, to compete with Qantas.
Last week, Qantas announced 5,000 job cuts, a company-wide pay freeze and the sale or deferment of 50 aircraft after revealing losses of A$235 million.
