Australia's PM cools on Qantas debt guarantee

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Australia’s prime minister has downplayed the likelihood of the government extending a debt guarantee to Qantas Airways in order to boost its credit rating.

“The difficulty is this: what we do for one business, in fairness, we have to make available to all businesses,” Tony Abbott told parliament on 27 March.

Abbott’s comments were made on the same day that Qantas announced that it would slash 5,000 jobs over three years after it recorded a pre-tax loss of A$252 million ($226 million) for the six months to 31 December 2013.

Qantas is understood to have been lobbying the government for a standby debt guarantee facility after its credit ratings were cut to junk status last year after it warned that it would report a loss of up to $300 million for the half-year.

The guarantee has been opposed by rival airlines Virgin Australia and Regional Express, on the grounds that it would give Qantas an unfair advantage unless similar treatment was given to all carriers.

Qantas has also been lobbying to have a legislated 49% foreign ownership cap on it lifted. That would allow it to split its operations and gain more access to foreign capital as its rival Virgin Australia did in 2012.

Senior cabinet ministers and the rival carriers have shown support for repealing the legislation, however the Labor and Greens parties oppose changing the ownership cap.

That is likely to make any amendments to the legislation are unlikely to pass through parliament until a new Senate sits mid-year.

Qantas says that talks with the government are continuing.