Foreign airlines will be allowed to own as much as 49% of Qantas under imminent changes to the Qantas Sale Act.
The Coalition Government has accepted a proposal by the Labor opposition which scraps the act's current foreign investment limits, under which no single investor in Qantas can hold more than 25% and foreign airlines can hold no more than 35% of Qantas shares in total.
Total foreign ownership of Qantas will remain capped at 49% so that the airline remains majority Australian owned.
It's hoped the higher foreign ownership limit will spur new investment in the ailing airline, which some analysts believe is facing a record loss exceeding $1 billion for the 2013-2014 financial year when one-off costs of redundancies are factored in.
However, Labor's proposals that two-thirds of the board are Australian citizens and that "maintenance, catering and other operations" would be conducted primarily in Australia will not be passed.
"Constraints on Qantas' ability to compete and engage in the market place Qantas at a disadvantage" said Federal Transport Minister Warren Truss.
However, Truss said that while the compromise agreement "will go some way to easing restrictive ownership provisions, Qantas will still operate under restrictions that do not apply to any other Australian airline."
"It is important that Qantas be granted greater flexibility and this is the only outcome the Senate will pass at this time."
Prime Minister Tony Abbott remains keen on more substantial changes to the Qantas Sale Act aimed at freeing the airline from all ownership restrictions, having previously said this was necessary "to maximise (the airline's) chances of being able to successfully compete and maximise Australian employment for the long-term."
Renewed attention on foreign ownership of Qantas comes as overseas airlines have boosted their stake in Virgin Australia to almost 80%.
Air New Zealand last month boosted its stake in Virgin Australia to 25.99%, the maximum permitted by the Foreign Investment Review Board.
Singapore Airlines holds 22.4% and Etihad follows at 21.4%, with a further 10% of shares belonging to Sir Richard Branson's Virgin Group.
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