The world’s biggest airline, Emirates, has ruled out throwing a financial lifeline to Qantas.
Emirates president Tim Clark has rejected suggestions that the airline might buy a stake in Qantas if the Australian Government lifts its current foreign ownership restrictions.
Emirates formalised a code-share partnership with Qantas earlier this year.
The deal was critical in underpinning Qantas’s loss-making international business and giving a boost to its sinking share price
But that is as far as Emirates wants to go for now, even if the Federal Government amends the Qantas Sale Act to lift foreign ownership from the current 49 per cent to around 60 per cent or 65 per cent.
However, he says Emirates does not have “a bottomless pit of cash”.
“So no, equity is not on the table,” he wrote.
The comments would not have been a surprise for Qantas.
When the Emirates deal was signed late last year, both airlines said it was about partnership rather than equity.
A Qantas spokesman says Mr Clark’s comments reiterate that understanding
The main game for Qantas now is to continue lobbying for a lifting of foreign ownership caps, which would allow a potential range of foreign investors to buy in.
That objective gained momentum over the weekend, when the Prime Minister Tony Abbott said he would consider relaxing the limits in the Qantas Sale Act.
While Qantas is yet to submit a formal proposal, it is understood the matter will go before Federal Cabinet tomorrow
One option is that the government might guarantee Qantas’s debt for a fee, as it did with banks during the global financial crisis
But it looks like a long campaign, and Qantas maintains that it needs “a level playing field” to raise capital like its chief competitor, Virgin Australia.
Qantas says the damage has already been done.
It has flagged a $300 million loss in the first six months of this financial year, and at least 1,000 more job cuts.