Qantas.

Qantas. Photo: Getty Images

Qantas has forged a code-share deal with Asia's largest airline, China Southern, as both carriers seek to funnel more passengers from Australia and China onto their respective networks.

The tie up comes as Prime Minister Tony Abbott sought to downplay expectations the federal government will shore up Qantas' deteriorating financial position by buying a stake in the national airline or guaranteeing its debt.

Mr Abbott said the government’s principle role was to "ensure that we’ve got a strong and competitive aviation sector", and pointed out that Qantas chief executive Alan Joyce had yet to settle on a specific proposal to put to federal politicians.

‘‘We need Qantas to, I guess, settle on what it wants. Maybe it wants to see the restrictions on ownership lifted,’’ he told Brisbane radio station 4BC.

‘‘I’m not sure that they really want to see a new government shareholding. And the trouble with providing a government loan guarantee is that where does it stop?’’

Mr Joyce was in China’s third-largest city of Guangzhou today for the unveiling of the code-share alliance with China Southern. 

Under the tie up, Qantas customers will be able to book on China Southern flights from Sydney, Melbourne, Brisbane and Perth to the airline’s hub in Guangzhou.

In turn, China Southern will code share on Qantas flights to 10 destinations in Australia and New Zealand.

China Southern, one of China’s "big three" airlines, has expanded aggressively on routes to Australia over the last few years, and has been eager to form an alliance with Qantas or Virgin Australia.

Last month it began flying A380 superjumbos on the Sydney-Guangzhou route. 

The airline did show in interest in buying a cornerstone stake in Qantas late last year, but its interest faded when the Australian airline strengthened its code-share alliance with Shanghai-based China Eastern early this year. The latter is also a joint venture partner with Qantas in Jetstar Hong Kong.

As part of the latest deal, Qantas and China Southern have agreed to look at other areas of co-operation including pilot-training and cargo.

Shares in Qantas were up 0.6 per cent at $1.2275 this afternoon.