Prime Minister Tony Abbott has signalled the prospect of the government handing a debt guarantee to Qantas is a remote possibility, despite the airline announcing a half-year $252 million underlying loss and plans to cut 5000 jobs and close routes.
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In a hardening of the government’s position, and in a move that ratchets up pressure on Labor to pass changes to the Qantas Sale Act – the government’s preferred option – Mr Abbott played down the prospect of debt guarantee being handed to the airline.
In Parliament on Thursday, Mr Abbott said he believed the national carrier should have a ‘‘level playing field’’ but signalled his government had cooled on giving a debt guarantee to the airline, despite foreshadowing such a move in recent weeks.
He said that while the government was determined to ensure Qantas could compete on a level playing field, ‘‘what we do for one business, in fairness, we have to make available to all businesses’’.
The change of direction heightened uncertainty surrounding the airline and put Mr Abbott at odds with Treasurer Joe Hockey, who had previously said the government was moving towards providing the debt facility.
Two weeks ago, Mr Hockey said the government was being dragged ‘‘kicking and screaming’’ towards a debt guarantee as the airline met four conditions: Parliament had imposed restrictions on the business, it was an essential national service, it was in direct competition with other government-backed airlines, and it was prepared to do the heavy lifting on its own reform.
The government’s preferred option is for changes to the Qantas Sale Act that would keep foreign ownership of the airline at 49 per cent but drop barriers that limit foreign airline ownership to 35per cent and a foreign shareholder to 25per cent. Labor has insisted on the overall limit remaining at 49per cent but has signalled it could compromise on the other caps.
The opposition berated the government for inaction and demanded the debt guarantee be provided immediately, while Mr Abbott indicated the government favoured removing ownership and operating restrictions.
‘‘Qantas does want a level playing field and the government is determined to ensure that they get an appropriate level playing field,’’ he said. ‘‘So, in that sense at least, Qantas does need this government’s help. Qantas does need this government’s help but it needs the Parliament’s help. In fact, it needs the opposition’s help too.
‘‘It isn’t government’s job to run businesses. It’s government’s business to get it right.’’
On Thursday, Infrastructure and Regional Development Minister Warren Truss said the government would monitor markets’ reaction to the airline’s announcement before responding.
‘‘The Qantas wage and cost structure places them at a significant disadvantage to the people they are flying alongside,’’ he said. ‘‘Many of them are Asian carriers these days, they are Middle Eastern carriers where the wage structures are very much lower.
‘‘Everyone has noticed the rise of Emirates and Etihad but we have to start watching the rise of China Southern and the major Chinese airlines.’’
Opposition Leader Bill Shorten called on the government to offer the debt guarantee and described the foreign ownership debate as a red herring.
