| SYDNEY, March 3
SYDNEY, March 3 The Australian government has
agreed to loosen restrictions on foreign ownership of Qantas
Airways Ltd that the loss-making national carrier says
have put it at a disadvantage versus its main rival in a battle
for market share.
Prime Minister Tony Abbott on Monday announced plans for
legislation to amend the Qantas Sale Act to remove conditions
limiting ownership by a single foreign investor to 25 percent
and all airline investors to 35 percent.
An overall cap on foreign ownership of 49 percent will
remain under separate legislation, while a request for a
government guarantee of Qantas' debt was turned down.
"I have enormous faith in the ability of Qantas to compete
and to flourish, but I think it is best placed to compete and to
flourish if it is unshackled and un-propped up by government, I
hasten to add," Abbott told reporters after the cabinet agreed
the changes late on Monday.
Both Qantas and its main domestic rival Virgin Australia
Holdings Ltd have been racking up big losses as they
fight for market share in Australia and struggle to cope with
high fuel prices.
Qantas last week said it was cutting 5,000 jobs as it posted
an underlying loss before tax of A$252 million ($226 million)
for the six months ended Dec. 31, while Virgin made a pretax
loss of A$49.7 million over the same period.
Although officially a domestic airline, Virgin Australia is
nearly two-thirds owned by non-Australian carriers - Etihad,
Singapore Airlines and Air New Zealand -
whose investments have provided funds for growth.
The deal will still need parliamentary approval, which is
not guaranteed given scepticism voiced by opposition and
independent members of the Senate upper house.
In addition to the ownership restrictions, the section of
the act the government wants to remove includes requirements
that the airline is headquartered and have its main operations,
maintenance and administration in Australia, raising the
prospect of some of those functions being moved offshore.
(Editing by David Holmes)