Last night the government announced it would back changes to the Qantas Sale Act. But it’s not the short-term help that the airline has been seeking.
Soon after the decision was announced, Qantas put out a statement explaining it needs alternative options (read: A debt guarantee) if the changes are not passed.
It currently looks unlikely they will be. The Greens and Labor have both said they don’t support raising foreign ownership in the national carrier. This means the legislation, as it stands, won’t make it through the Senate.
The Qantas statement says:
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. However, it is clear that such a move would have a limited chance of passing through the Senate.
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.
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.
Virgin echoed this sentiment, though from another side of the fence. This morning it said it was pleased with the decision to amend the Qantas Sale Act, but not to offer a debt guarantee.
It’s a big deal that Tony Abbott hasn’t offered the guarantee. Reportedly Qantas had been led to believe it would get one in return for its huge restructure, which includes 5000 people losing their jobs.
Tony Abbott made one statement on Channel Seven that is especially telling.
“Look, if you go back over the last decade, for much of the time Qantas has been hugely profitable. Now, under good management, there is no reason why Qantas cannot be very profitable; there’s no reason why Qantas can’t continue to be one of the world’s great airlines,” he told the Seven Network on Tuesday.
Abbott has said he expects Labor and The Greens to help him pass the ownership changes. But at the moment they’re holding firm. So unless, in a drastic shift, the parties vote the changes into law, the government has simply announced theoretical assistance that will do pretty much nothing to help Qantas in the short-term.
One read on this remark from Abbott is: I’m not fighting for a debt guarantee handout because there’s no reason “under good management” that the airline can’t fix its own problems.
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