One of Qantas's largest unions claims the removal of the airline's foreign-ownership cap would put jobs at the national carrier on "a super highway out of the country".
Speaking at a Senate inquiry on Friday, Australian Services Union assistant national secretary Linda White said a repeal of the Qantas Sale Act would "not only take Queensland and the Northern Territory out of Qantas but Australia as well".
Ms White said any changes to the legislation would be a radical departure from the way the aviation industry was regulated in most countries, and would fast-track Qantas in its attempts to send jobs overseas.
Ms White said thousands of jobs could be moved offshore if the protection offered by the Sale Act was removed. The most likely to go would be call-centre jobs or those which did not involve any reaction with passengers.
"Everything is on the table," she said.
Ms White said Qantas offshored about 1000 information technology jobs in 2006, reducing significantly its IT capacity here in Australia. The entire call centre operations for Qantas' budget offshoot, Jetstar, were based in the Philippines.
The ASU has about 6500 members at Qantas, down from 9000 in 2002.
Ms White said the Sale Act had been a significant barrier to Qantas sending jobs overseas and, if removed, would create a "super highway out of the country".
Another of the major unions, the Transport Workers' Union, claimed on Friday that neither the airline's management nor its workforce knows where the axe will fall in the business, weeks after the company outlined plans to cut 5000 jobs, , a move which an aviation expert says shows management has mishandled the situation
Qantas chief executive Alan Joyce and a raft of union heavyweights are appearing before a Senate inquiry in Sydney on Friday into whether the Abbott government should provide the airline with financial assistance or other forms of help.
In comments attributed to Mr Joyce, Qantas chief financial officer Gareth Evans read out a prepared statement saying the airline faced a "manifestly un-level playing field which threatens our future prospects".
It would be naive to suggest that any of Virgin Australia's three state-backed shareholders did not "have an agenda in bankrolling our competitor", he said, referring to Air New Zealand, Etihad and Singapore Airlines.
You'd have to think that to reach this stage there is something wrong in the way management is handling the situation.
Transport Workers Union national secretary Tony Sheldon said the management still couldn't say where exactly the axe would fall within the company.
"The workforce doesn't know and the company doesn't know," he told the inquiry on Friday. "There has been no explanation of how Qantas came up with the 5000. They will stick to the 5000 no matter what."
Under earlier questioning at the inquiry, CAPA Consulting managing director Ian Thomas said it was hard to understand why Qantas suddenly needed to cut 5000 jobs rather than making smaller cuts cutting over a period of time.
"You'd have to think that to reach this stage there is something wrong in the way management is handling the situation," he said.
"To announce 5000 jobs is fairly dramatic, certainly."
The government has ruled out financial help but is pushing for the repeal of a key part of the Qantas Sale Act, which limits foreign investment in the airline at 49 per cent and a single overseas investor at 25 per cent.
Mr Sheldon said outsourcing of work at Qantas had accelerated under the management led by Mr Joyce, compared with Virgin Australia which was "actually insourcing its work".
"The airline has a recipe for disaster, not a recipe for success," he said.
Qantas will this month close its heavy aircraft maintenance base at Avalon Airport near Geelong in Victoria with the loss of almost 300 jobs.
The Australian Licenced Aircraft Engineers' Association said a further 175 licenced aircraft engineers would go under the latest round of cuts. The number of unlicenced engineers to be axed is still unknown.
Mr Joyce and his senior executives including chief financial officer Gareth Evans will appear before the Senate hearing in Sydney shortly after midday on Friday.
Mr Thomas told the inquiry that Qantas's woes had been building over time, especially its ability to make strong profits in a "market which was simply heading in the wrong direction" for a premium airline.
Mr Thomas said he did not believe there was a role for the government to play in assisting Qantas in the short term.
He agreed with a senator that a debt guarantee would not have averted Qantas's decision last month to axe 5000 jobs.
"Qantas's debt situation at the moment is not perilous," he told the senate inquiry. "At this stage I don't think it needs it."
He said foreign ownership restrictions imposed on Qantas when it was floated in the 1990s was an "anachronism and that has to be removed".
Mr Thomas said its removal would give Qantas more options, such as the ability to bring in an overseas partner to inject funds.
"[But] I don't think there is anybody waiting in the wings," he said.
Analysts from CLSA have suggested that one of the big benefits to the airline of repealing a key part of the Qantas Sale Act would be to send overseas jobs or outsource more work to third parties within Australia.
But Mr Thomas said he did "not see any great opportunity" for Qantas to send substantial amounts of work overseas apart from heavy maintenance.
Independent senator Nick Xenophon, a vocal critic of Qantas, raised questions about whether there was cost-shifting within the airline group whereby Jetstar was subsidised by the premium part of the business.
Mr Thomas said there were many areas within an airline group such as Qantas where there was an overlap in costs such as fuel. "It is a proportionate issue - it is what they decide is a reasonable proportionate issue," he said.
with Jamie Freed