Qantas to remain in Australian hands thanks to hostile Senate

Qantas: Airline to stay locally owned. Photo: Michele Mossop/Getty ImagesQantas will remain majority Australian owned after the federal government was forced by a hostile Senate to back down on its ambitious plan to open up the airline to foreign investment.

In an admission its plan to repeal section three of the Qantas Sale Act would not win support from Labor, the Greens or the crossbench, federal cabinet approved a compromise proposed by the ALP on Monday night.

The compromise deal was ticked off by the Coalition party room on Tuesday and comes despite Transport Minister Warren Truss declaring in March the government had ”no plan B” to help the airline if it failed to repeal the sale act.

In June, Labor announced it would allow the foreign ownership restrictions on Qantas contained in section three of the act, which limit an individual investor to 25 per cent ownership and a foreign-owned airline to 35 per cent, to both rise to 49 per cent.

That move is designed to trigger an inflow of investment but falls short of what the airline wanted.

A vote could go ahead in the Senate as soon as Wednesday in the Senate, with the bill then to be sent to the lower house for approval.

Other changes that could have flowed from repeal of the act, including requirements that two-thirds of the board are Australian citizens, its headquarters be in Australian and that maintenance, catering and other operations are conducted primarily in Australia, will not proceed.

The federal government’s original proposal had sparked fears among Labor, the Greens and the union movement that thousands of Australian jobs could be sent overseas by the airline.

Labor transport spokesman Anthony Albanese welcomed the government’s decision to agree to the ALP’s proposal. ”This reform will ensure that Qantas will remain majority Australian owned and that Qantas will still call Australia home, while making minor changes in accordance with the aviation white paper I released in December 2009,” he said.

A spokesman for Qantas said it was a positive that there was general political agreement that Qantas was put at a disadvantage by the sale act and that change is needed. ”While removing all restrictions that apply only to Qantas remains our preference for levelling the playing field, changing the 25 and 35 per cent limits would represent an improvement on the status quo,” the spokesman said.

Qantas has been pushing for the Qantas Sale Act to be repealed, arguing it does not face a level playing field with its major competitor Virgin, which is majority foreign-owned and does much of its heavy maintenance overseas.

In February, Qantas announced a $252 million half-year underlying loss and plans to cut 5000 jobs and close routes.

Soon after in March, the government announced it would not give the airline a debt guarantee but would instead push to repeal section three, but Labor and Greens opposed that move.

Mr Truss said the government still backed its plan to repeal section three of the Qantas Sale Act.

However, he said it was clear that this would not be able to pass the Senate and so it had decided to accept Labor’s proposals.

”The amended bill will go some way to easing restrictive ownership provisions. Qantas will still operate under restrictions that do not apply to any other Australian airline, but will have greater capacity to attract new investment,” Mr Truss said.

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