Illustration: Rocco Fazzari.

Illustration: Rocco Fazzari.

Something is missing from the great Qantas survival debate - the company's main shareholders.

The management, led by Alan Joyce, has been front and centre, the chairman Leigh Clifford has been flag-flying, the federal government has been vocal - albeit with inconsistent messages - and the unions have been weighing in.

Senator Nick Xenophon has become an airline and corporate governance expert.

But where are Qantas's owners? AWOL.

It is traditional in times when a financial crisis has emerged for the main shareholders to begin agitating, applying pressure on management either to change the strategy or to move on.

But Qantas doesn't have much of an activist investor set. Big international fund management group Capital is the largest shareholder and tends to trade around the edges, although it appears to be reducing its stake.

One could only imagine the behind-the-scenes meetings and the queues outside Leigh Clifford's office if the likes of Perpetual, BT, Perennial, etc, had sizeable holdings in Qantas.

Instead Joyce and Clifford are two legs of the governance stool - mutually supportive and wedded to a strategy that has flaws.

It has been convenient to blame fierce competition from Virgin for their woes and, make no mistake, this is the icing on the cake.

It is just not the full story. Virgin now has some powder in its keg, thanks to supportive shareholders, to fund its capacity and fare war.

As a listed company Qantas also has the ability to go to the market and raise fresh funds. At least in theory.

But it's a hard task when the shareholder base is mainly retail shareholders. There would be support for a deeply discounted underwritten issue but it would be very expensive.

Instead the board sees the answer in the partial sale of some assets and the full disposal of others, such as the terminals. It is a defensive move.

But it's hard to see how this addresses the underlying and ongoing problem.

Qantas needs to raise the white flag on the capacity war and relax the 65 per cent line in the sand on market share. It is meant to be about profitable market share not running planes that are 70 per cent full on falling yields.

The management would also receive an immediate vote of confidence if it undertook to desist in the bankrolling of Jetstar's offshore subsidiaries - seen as profligacy at a time when Qantas can ill afford it.

The fact Qantas could lose $300 million in the six months to December and that amount again the following six months cements how damaging the strategy has been. The ratings agency downgrade is very costly and of Qantas's own making.

During the next few weeks another theme will begin to emerge in this saga. Is there an opportunity for some private equity players to take an involvement - buy the stock on the cheap and manufacture a turnaround?

There will undoubtedly be some tyre-kickers who would be keen to flog bits and pieces such as the frequent-flyer scheme and bits of Jetstar or airline terminals. Already there have been suggestions that former Macquarie investment banker Greg Woolley has investors lined up to buy some of the Qantas fleet, as long as it comes with a government guarantee. But, if Qantas is having trouble getting the government on board for a guarantee, it's hard to imagine an airline leasing company having any luck.

The word in private equity circles is that at the current price there is limited appetite for the shares.

But if the Qantas share price sinks too far below $1 the investment complexion changes. There will be plenty of people coming out of the woodwork, in time, just no one especially credible yet.

In the meantime Joyce needs to clean up some of the mess created in the past month. The heavy-handed approach to stopping Virgin's equity issue has badly backfired and, despite protestations to the contrary from Qantas, the government is firm in its position that providing any sort of financial assistance to the airline opens an unpalatable can of worms.

The most immediate task will be to assure the flying public that Qantas is secure and remains open for business. The airline can ill-afford to lose forward bookings or have a run on frequent-flyer redemptions. This would move the situation from bad to catastrophic.

Australians have seen the collapse of a big airline - Ansett - and don't take the view that it can't happen again.

Qantas is a long way from worrying about changes to the ownership limitations in the Qantas Sale Act. That is a job for another day when the intensity of the crisis has passed.

Joyce has until February to come up with a structural solution that will satisfy the ratings agencies and the stock market.

If the share price drifts down sufficiently even a complaint board would need to be asking whether the management that devised the strategy is in a position to revise it.