Australian Prime Minister Tony Abbott on Friday said there will be no taxpayer hand-outs for struggling national carrier Qantas but flagged support for lifting foreign ownership restrictions on the airline.
Qantas has been lobbying the government to ease limits in foreign investment or provide state intervention to help shore up its bottom line as it battles record fuel costs and fierce competition from subsidised rivals.
Chief executive Alan Joyce has been in Canberra this week to push for a relaxation of the Qantas Sale Act, which limits foreign ownership to 49 per cent, or a possible debt guarantee.
Joyce argues that the cap is hurting Qantas's ability to compete by restricting its access to capital, particularly against domestic rival Virgin Australia, which is majority-owned by state-backed Singapore Airlines, Air New Zealand and Etihad.
Abbott admitted the law was a problem.
"Qantas have been shackled by legislative restrictions that were put in place by the Labor Party back in the 1990s and I think it would be perfectly appropriate to unshackle Qantas," he said.
"But I do have to say there is no free ride on the taxpayer for private companies."
Since coming to power last year, the conservative government has adopted a hard line on industry assistance, warning only last week that "the age of entitlement is over" when it comes to taxpayer-funded hand-outs.
It refused to offer any incentives to automakers Holden or Toyota, both of whom have now said they will stop making cars in Australia.
Abbott said: "It's not the job of the federal government or the prime minister or the would-be prime minister to rush down the street waving a blank cheque at businesses."
He added: "So, yes, let's have a level playing field for Qantas. Let's not have Qantas competing with Virgin and others with one hand tied behind its back."
As well as limiting foreign ownership in Qantas to 49 per cent, the act also prohibits any offshore entity controlling more than 25 per cent of the carrier.
In December, Qantas said it was facing some of its toughest-ever challenges as it flagged a half-year loss of up to AUD$300 million (US$269 million) and the axing of 1,000 jobs. The airline reports its interim first-half results later this month.
The Labor opposition is against allowing majority overseas ownership of Qantas, but is open to the government providing an assistance package.
Virgin has said it would be happy to see Qantas relieved of its ownership restrictions but disputes the need for government support.
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