The Prospect Of A Qantas Debt Guarantee Is Fading

Transport Minister Warren Truss has swung in behind Tony Abbott over a potential debt guarantee for Qantas, after the Prime Minister signalled cooling government support for the measure.

Truss told The Australian that while the airline faced significant challenges its newly announced plans for recovery were not dependent on Commonwealth backing for its debt.

“I’ve always considered that government intervention is an absolute last resort, an absolute last resort.

“I think Qantas is quite a long way away from being at a critical point; it has still got a debt rating two points higher than Virgin’s,” Truss said.

The Prime Minister’s statement yesterday that any support measure should be available to the whole industry, not just Qantas, has come as a surprise, and undermined Treasurer Joe Hockey’s indications that the government was preparing to move on assistance.

Virgin Australia chief executive John Borghetti has said such government assistance for Qantas would entrench “an age of entitlement” and that the best option would be to remove the carbon tax, “which has cost the industry hundreds of millions of dollars and to that end may I just say we applaud the government’s position on this”.

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