Possible Qantas law change sparks takeover talk

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.