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Sun 13 Apr 2014 12:10 PM

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Qantas foreign ownership is the "only solution" - Australian Trade Minister

Topic will be on the agenda during talks with Dubai's Emirates Airline, which formed an alliance with Qantas last year

Qantas foreign ownership is the "only solution" - Australian Trade Minister
Australian Trade and Investment Minister Andrew Robb. (AFP/Getty Images)

Australian Trade and Investment Minister Andrew Robb says foreign investment in struggling national carrier Qantas will be the “only solution” to making sure its brand and viability remain strong.

In a further confirmation that the Australian government is set to heed Qantas’ pleas for reforming ownership laws, Robb said Canberra wanted to open up opportunities for foreign investors through creating a “flexible framework” for businesses to come in.

Under the Qantas Sales Act ownership is restricted by a single foreign shareholder at 25 percent and a foreign airline at 35 percent, with an overall 49 percent cap.

“I don’t think we would then get involved in how that sorted itself out, but I think Qantas would very much welcome other foreign investors,” Robb told reporters at the second Australia Unlimited MENA trade event in Dubai.

“That would give them a much leveler playing field with Virgin Australia, which has got an unfetted… it’s 70 or 80 percent owned by other foreign airline interests, and it’s worked very well to their advantage.”

Robb said the government was “quite keen” on reforming ownership laws, but “we’re having problems with the Senate at the moment, convincing the rest of the Parliament that that is the way to go”.

“But, I think in time it’s the only solution to make sure that the Qantas brand and its viability remains very strong,” he said.

Robb confirmed he would raise the issue with Sheikh Ahmed bin Saeed Al Maktoum, president of the Department of Civil Aviation and CEO of Emirates Airline, with which Qantas formally entered an alliance last year.

“I’ll give him the same answer really – the government, we want to see viable airlines in Australia, so in the case of Qantas I think it requires a change to the ownership act and the potential for other entries into the ownership,” he said.

In February, Qantas revealed posted a record $235m half-year loss and announced a $2bn cost reduction program through to the end of 2017 with 5,000 jobs to be axed, route cuts and more than 50 aircraft deferred or sold.

At the time Qantas CEO Alan Joyce took a fresh swipe at domestic competitor Virgin Australia’s majority foreign ownership, which includes Abu Dhabi's Etihad Airways, saying the Australian domestic market had been distorted by current Australian aviation policy, aviation policy, which allowed Virgin Australia to be majority-owned by three foreign government-backed airlines and yet retain access to Australian bilateral flying rights.

Etihad, which is owned by the Abu Dhabi government, owns 19.9 percent of Virgin Australia, alongside Air New Zealand, which has a 23 percent stake and Singapore Airlines, which owns 19.9 percent.

Emirates president Tim Clark said in December the alliance would not be deepened by Emirates bailing out Qantas.

Clark told The West Australian newspaper that he “would watch [the situation] carefully” but Emirates did not have the “bottomless pit of cash” Virgin Australia's partner Etihad Airways had.

"So no, equity is not on the table,'' Clark said.

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