Cabinet resists Qantas aid options – Business Spectator

The prospect of the federal government offering support to Qantas Airways Ltd — through measures such as buying shares or guaranteeing the airline’s debt to lower the risk of a credit downgrade — is facing much resistance from within the federal cabinet, according to The Australian.

Transport Minister Warren Truss has ruled out investing taxpayer dollars in the airline to help it compete against rival Virgin Australia, while Treasurer Joe Hockey said “of course, the government is very, very reluctant to own an airline”, The Australian reported.

It was Mr Hockey himself whose earlier comments renewed the debate about potential government support for the airline. On Friday, Virgin Australia head John Borghetti called on the government to provide his company with the equivalent support of anything provided to Qantas.

The Abbott government is believed to take the least favourable view of the prospect of taking a 5 or 10 per cent stake in the airline, though it may be more open to offering some form of backing for the airline’s debt since a credit downgrade could cripple Qantas.

The government resistance to stepping in could force Qantas to consider other options, such as a share sale, selling assets or deferring aircraft deliveries to stabilise its financial position and protect its credit rating.

Shadow transport minister Anthony Albanese said the government “should consider measures such as taking a small equity position in the airline in order to signal to markets that this isn’t a company that is just like any other in Australia”, The Australian Financial Review reported.