Emirates Airline president Tim Clark has ruled out taking a stake in alliance partner Qantas Airways despite indications from the Australian government that it is open to relaxing foreign ownership restrictions on the carrier.
Clark was reported in the Australian media as saying that Emirates does not have a “bottomless pit of cash” and adds that “equity is not on the table” in its ongoing discussions with Qantas.
The two carriers entered into an alliance in April this year, which resulted in Qantas moving its hub for European flights from Singapore to Dubai.
Clark's comments come after Australia's prime minister Tony Abbott recently told reporters that it was not an “unreasonable request” to loosen the foreign ownership restrictions on Qantas, but he also noted that it was not up to the government to ensure that the carrier survives in the face of stiff competition.
Due to restrictions in the Qantas Sale Act, the carrier is restricted to a maximum 49% foreign ownership cap that also prevents any single foreign carrier from taking more than a 25% stake in Qantas. The same restrictions do not apply to rival Virgin Australia, which was recently able to raise A$350 million in a capital raising backed by Etihad Airways, Air New Zealand and Singapore Airlines.
Abbott adds that the government would “obviously work constructively” with Qantas on any formal proposals being put forward in discussions that have been ongoing in recent months, but gave no other details of the talks.
It is understood that Qantas has proposed government guarantees for its debt after its credit rating was downgraded nearly two weeks ago by Standard & Poor’s.
That downgrade came after the carrier flagged that it expects to make a loss before tax of up to A$300 million ($270 million) for the six months to 31 December, prompting a fresh round of cost cuts and capital expenditure reviews.