The Federal Government will revise the Qantas Sale Act and lift all restrictions on foreign ownership of Qantas, paving the way for increased overseas investment and potentially 100% foreign ownership of the Flying Kangaroo.
"We will seek to repeal part three of the Qantas Sale Act in its entirety" said Prime Minister Toby Abbott this evening, calling out that part of the act which covers foreign ownership of the airline as well as anchoring most maintenance in Australia.
The government aims to introduce the legislation by the end of this week, although it's unlikely to pass the Senate, with the Labor Party already ruling out support for the government's amendment and earlier today describing removal of the 49% foreign ownership cap as "a red line."
However, Labor has indicated willingness to abolish the current 25% limit on a single foreign investor and 35% cap on total stakeholding by all foreign airlines.
The legislation would likely be trotted out again when the new senate takes over mid-year, but the government would still need to take its chances with a clutch of new and unaligned senators including the Palmer United Party, Liberal Democratic Party, Family First and Australian Motoring Enthusiast Party.
The picture has been further muddied by last months' High Court declaration that Western Australia's 2013 Senate poll was invalid due to the loss of 1,370 ballot papers, with a new election for six senators to be held on April 5.
Qantas split into domestic, international
Should the legislation pass, however, Qantas would be forced to split its domestic and international arms into two effectively separate companies, rather than the current operational division.
This would be necessary because Australia's Air Navigation Act requires that an international airline be majority Australian-owned, although it places no such restrictions on domestic airlines which can be entirely foreign-owned.
Under that arrangement Qantas Domestic would be able to take up to 100% foreign ownership while Qantas International would be capped at 49%.
The new structure would ironically mimic that of Virgin Australia – a structure which Qantas CEO Alan Joyce once labelled a "sham" and has repeatedly said provided the challenger with an unfair advantage due to investment from Virgin partners Air New Zealand, Etihad and Singapore Airlines, which together hold approximately 65% of Virgin Australia Holdings.
No debt guarantee
However, the government rejected providing Qantas with a debt guarantee.
"We certainly don't believe in any normal circumstances that government should be playing favourites between competing private businesses" Abbott said, adding that Virgin Australia, like Qantas, employed Australians and operated in Australia.
"We want to ensure that both these fine airlines are operating under the same rules” he said.
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