Australia's Prime Minister Tony Abbott has suggested he may support lifting foreign ownership restrictions on Qantas, saying the embattled carrier's push for a level playing field was not unreasonable.
Qantas has been lobbying the government to relax the Qantas Sale Act which limits foreign ownership in the national carrier to 49 per cent.
The struggling airline argues the cap hurts its ability to compete, particularly against domestic rival Virgin Australia, which is majority-owned by state-backed Singapore Airlines, Air New Zealand and Etihad.
"Where we can be helpful we will certainly try to be helpful but as I understand it, what Qantas wants is to be unshackled," Abbott said in an interview in the Australian Financial Review published on Saturday.
"They want to be able to compete with Virgin on a level playing field. Now I don't think that's an unreasonable request on their part, but that's a matter for the parliament as well as the government."
Earlier this month, Qantas flagged a half-year loss of up to A$300 million (US$269 million) and said it would axe 1,000 jobs as it struggles under the weight of record fuel costs and fierce competition from subsidised rivals.
The announcement saw Standard & Poor's downgrade the airline's credit rating to "junk" status, cutting it from BBB-, the lowest investment grade, to BB+ and placed it on a credit watch with negative implications.
The AFR said Qantas apparently sought a government guarantee in the short-term to protect its credit rating but no agreement had been reached.
Abbott has previously indicated that government assistance was unlikely, saying: "If we subsidise Qantas, why not subsidise everyone?"
"If we subsidise everyone, that's just a bottomless pit into which we will descend and if we offer a guarantee to Qantas then why not offer a guarantee to everyone?"
But the long-term fix of removing the foreign ownership restrictions would be opposed by the Labor opposition which argues that with the airline's share price hovering around A$1, the 'flying kangaroo' would be vulnerable to an equity raid.
Chief executive Alan Joyce has stressed that the airline is not seeking "an anti-competitive handout or bail out" but said the carrier was "hand-cuffed" by the Qantas Sale Act.
Qantas claims domestic rival Virgin Australia is waging a campaign to weaken it in the lucrative domestic market with cheap seats underwritten by foreign cash injections.
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