Possible Qantas law change sparks takeover talk

PUBLISHED : Friday, 29 November, 2013, 4:10am
UPDATED : Friday, 29 November, 2013, 4:10am

The Australian government has flagged allowing majority foreign ownership or increased government support for Qantas Airways, a move that could shake up the regional aviation sector and make the national carrier a takeover target.

Treasurer Joe Hockey yesterday sparked speculation on Qantas by calling for a debate on the Qantas Sale Act, the law that caps foreign ownership of the airline at 49 per cent.

Hockey, acknowledging that Qantas is in "regulatory handcuffs", hinted that he would lean towards lifting foreign ownership restrictions, warning taxpayers would pay the price for keeping Qantas an Australian-backed airline through government support.

Any change to the law, brought in two decades ago when Qantas was privatised, could make the airline a takeover target, and give it a leg up in a competitive regional aviation market.

Hockey's comments come amid a bitter battle between Qantas and its rival, Virgin Australia, which is majority owned by Gulf carrier Etihad, Singapore Airlines and Air New Zealand.

Qantas has complained to the government about Virgin's move to tap its foreign shareholders for A$350 million (HK$2.47 billion) in new capital.

Qantas chief executive Alan Joyce made his preference for government assistance clear in a letter to employees yesterday.

"Australia needs its national carrier," Joyce said. "A strong aviation capability is a national asset, important for our national security and our global identity."

Prime Minister Tony Abbott said: "Qantas should remain an Australian icon. I'm happy to look at a range of measures that will help ensure that happens but certainly at this point in time I'm not being prescriptive about any particular change."