Qantas closed more than six per cent higher at $1.18 per share on comments by Treasurer Joe Hockey in support of the struggling airline.
The national airline bucked the market as the ASX was smashed flat by jobless numbers hitting six per cent.
Hockey gave the first indication that the federal government may help.
Hockey said the Australian airline now faced a “2000 pound gorilla” in the form of the largely foreign owned Virgin, while Qantas was restricted by law in the foreign investment it could seek.
Qantas is seeking government-backed debt guarantees as the airline heads to a half-year loss of $300 million.