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Australia says no blank cheques for Qantas

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(Globalpost/GlobalPost)

The Australian government insisted Tuesday there would be "no blank cheques" to bail out national carrier Qantas which admitted a plan to repeal legislation restricting foreign ownership was destined to fail.

The cabinet of conservative Prime Minister Tony Abbott on Monday evening said it would move to change a section of the Qantas Sales Act which limits foreign ownership to 49 percent to free up capital for the airline.

But with the Labor opposition and other minor parties making clear they will oppose the legislation in the upper house Senate over fears jobs will be sent offshore, the proposal is effectively redundant.

Qantas said the changes were doomed, adding that it needed help now after a Aus$235 million (US$210 million) loss in the six months to December 31 and a decision to slash 5,000 jobs.

"We have consistently said that removal of foreign ownership provisions that apply uniquely to Qantas is an important longer term objective to create a fair and free aviation market in Australia," it said in a statement.

"However, it is clear that such a move would have limited chance of passing through the Senate."

Qantas complains that is battling not only high fuel prices but fierce competition from subsidised rivals such as key domestic competitor Virgin Australia, which is majority-owned by state-run Singapore Airlines, Etihad and Air New Zealand.

"We need immediate action to address the imbalance that has been allowed to persist for almost two years -- namely Virgin's unlimited ability to access foreign capital from government-owned airlines to fund a loss-making strategy against Qantas," it said.

"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."

But Canberra has ruled out a debt guarantee or line of credit as short-term help and Treasurer Joe Hockey refused to budge on Tuesday.

"We are not writing out blank cheques," he said, with the government taking a hardline on taxpayer handouts to business since coming to office last year.

"There is no money," he added. "There's nothing left in the bank to write out largesse to individual companies."

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http://www.globalpost.com/dispatch/news/afp/140303/australia-says-no-blank-cheques-qantas