Abbott to mull Qantas proposals
The Australian government will consider any proposal the nation’s struggling airline puts on the table but has stopped short of meeting calls to change foreign-ownership laws.
Prime Minister Tony Abbott says it is important for Qantas, including staff, management and shareholders, to fight its own battle.
Qantas, facing a sinking share price and plans for 1000 job cuts, has appealed to the Commonwealth to ease the 1992 Qantas Sale Act.
The act limits foreign ownership in the airline to 49 per cent.
According to media reports on Sunday, a Qantas pilot is considering an employee bid for up to 25 per cent in the iconic airline, known as “the flying kangaroo”, to keep it viable.
Meanwhile, The Australian Financial Review has reported that a government guarantee is under serious consideration, which would involve a fee of around 1.5 per cent for the provision of a standby debt facility.
Mr Abbott said staff and shareholders “should fight for survival and prosperity of the business”.
“We are perfectly prepared to consider whatever proposals Qantas puts to us,” he told reporters in Sydney on Sunday.
“But in the end there is no proposal that government will successfully implement if Qantas is not prepared to fight for it.
“We need to see Qantas staff, management and shareholders doing everything they humanly can to get Qantas’ house in order so this great and iconic Australian business can have the kind of flourish and future we all want for it.”
He denied he was critical of the airline’s management.
“I am not critical of Qantas management or staff. I am just saying that no one will fight harder for the survival of Qantas than its managers, its workers and its shareholders,” he said.
However, Mr Abbott told the Australian Financial Review at the weekend that Qantas’s desire for easing of the Qantas Sale Act was not “unreasonable”.
Qantas chief executive Alan Joyce had said the airline was not competing on a level playing field, with competitor Virgin receiving a $350 million injection from its foreign owners Etihad, Air New Zealand and Singapore Airlines.
But independent Senator Nick Xenophon said it was not the Qantas legislation which needed to be changed but the management and board.
Senator Xenophon challenged Mr Joyce to show one dollar of profit since setting up Jetstar Asia and other offshoots.
“If the CEO Alan Joyce and the chairman Lee Clifford go, that will transform the airline because they have presided over monumental strategic mistakes including the failed Jetstar experiment in Asia where they have burned hundreds of millions,” he told AAP.
“The airline is now vulnerable to a private equity takeover because the share price is so low. The private equity buccaneers are now circling the airline.”
Meanwhile, Labor remains unconvinced about the need to alter legislation, with MP Matt Thistlethwaite saying the restrictions in the Qantas Sale Act existed for a good reason.
“Given what happened to private equity in the global financial crisis you could probably fairly say if we didn’t have the Qantas Sale Act…..Qantas would not be here today,” he told Sky News.
Liberal Josh Frydenberg said Qantas was an iconic Australian brand which should survive and proper.
“It would be negligent of us not to investigate the various ways we could help Qantas to survive and prosper,” he told Sky News.
“Ultimately if you were to change the ownership restrictions, that would be an issue for the Australian parliament.”
A spokesman for Qantas welcomed the acknowledgment of an uneven playing field.
He said the company was in ongoing talks with the government about how it could be levelled.
“But we’re not in a position to comment on those discussions other than to say we’re certainly not looking for a handout from taxpayers,” he said.
The spokesman said Qantas had previously called for review of the legislative framework distorting the Australian aviation market.
“Access to foreign capital has become a major factor in this market and Qantas is denied the same access as its competitors. But ultimately, the Qantas Sale Act is a matter for Parliament,” he said.