Govt to repeal Qantas Sale Act

Qantas would face national interest tests even if its ownership laws were repealed says Tony Abbott. Source: AAP

THE federal government has opened the door for Qantas to have more foreign investment but the airline may have to restructure and jobs could go offshore.

Qantas has asked the government to change the Qantas Sale Act to allow more foreign investment arguing the strings attached hampered its ability to compete on a level playing field with its rivals.

Federal cabinet on Monday rejected a debt guarantee sought by Qantas but agreed to repeal part of the Act that stops foreign airlines from holding more than a 35 per cent of Qantas or a greater than 25 per cent stake for any single foreign shareholder.

Mr Abbott said that under the proposed changes, Qantas foreign ownership would be limited still by the Foreign Investment Review Board and the Air Navigation Act.

"They do have to have 51 per cent Australian ownership, they do have to have their headquarters and the substance of their business based in Australia," Mr Abbott said.

Mr Abbott did not say how Qantas could capitalise on the change saying that was up to the airline, which could restructure itself.

He said that under what they are proposing, Qantas' international arm would "remain in every sense" an Australian airline.

"Qantas domestic, should there be a distinction, would remain a substantially Australian airline," Mr Abbott said.

The move means other government owned airlines will be able to take a majority stake in the domestic arm of Qantas for the first time even while foreign ownership of the international arm would have to remain capped at 49 per cent.

Some aviation analysts argue the best option for Qantas would be to split the company into three separate companies: domestic, international and ancillary services such as the Frequent Flyer program and freight.

Mr Abbott said the changes will provide business flexibility for Qantas consistent with other airlines based in Australia.

He conceded that some jobs may go offshore in any restructure.

"If some jobs have to go offshore in order to ensure that Qantas has a strong and viable long-term future, it may be regrettable but nevertheless it is the best way to guarantee Australian jobs for the long term," Mr Abbott said.

The coalition will take legislation to parliament as early as this week and hopes Labor will not prevent the bills from passing the upper house where the government does not have the numbers alone to pass laws.

"I don't believe that even the Labor party as currently constituted is going to stand aside and let Qantas bleed," Mr Abbott said.

But both Labor and the Australian Greens plan to oppose the repeal which means it is unlikely to pass in the Senate.

Labor believes the change will lead to a restructure that would see thousands of jobs going overseas.

Opposition transport spokesman Anthony Albanese said all previous indications from Treasurer Joe Hockey had suggested the coalition was more likely to offer Qantas a debt guarantee than repeal the Act.

"No one who had read the tea leaves ... in the past few months could have predicted that they would attempt to get rid of the entire section of the act," he said.

"Every single principle which makes the flying kangaroo an Australian is gone under this proposal."

The Australian Greens said they don't want to lose a national carrier and see jobs go offshore.

"Tony Abbott is out to kill Qantas as our national carrier," Deputy Leader Adam Bandt said.

Qantas acknowledged the coalition move "would have limited chance of passing through the Senate".

"If this proposal by the government to change the Qantas Sale Act is not passed, we would expect the government and the parliament to consider alternative measures to balance the unlevel playing field in Australian aviation."

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