Qantas Won’t Receive Debt Guarantee from Australia, Abbott Says
Prime Minister Tony Abbott said he won’t guarantee the debt of Qantas (QAN) Airways Ltd. as Australia’s biggest airline prepares to cut 5,000 jobs and trim A$2 billion ($1.8 billion) in costs amid a battle for market share.
The government will instead seek to amend legislation that caps foreign ownership of Qantas, Abbott told reporters following a Cabinet meeting today.
“Cabinet is not proposing at this time, on the evidence before us, to offer Qantas a debt guarantee or a line of credit,” Abbott said. “I have enormous faith in the ability of Qantas to compete and to flourish, but I think it is best placed to compete and to flourish if it is unshackled and un-propped up by government.”
Qantas Chief Executive Officer Alan Joyce has argued the carrier can’t compete in a domestic fare war with Virgin Australia Holdings Ltd. (VAH), whose three biggest shareholders are state-controlled foreign airlines that he says want to weaken Qantas’s international business. The company, which was stripped of its investment-grade ratings, posted a A$252 million loss last week and said it will sell or delay delivery of more than 50 planes and freeze pay until the company returns to profit.
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