A Qantas pilot has written to Prime Minister Tony Abbott over a potential employee bid for a share of the airline.
Shares in the company hit a record low last week, shortly after the airline’s credit rating was downgraded to “junk” status by global ratings agency Standard and Poor’s following a $300 million half-year loss.
It is understood the airline has flagged several ways in which the Government could assist it, and Mr Abbott has suggested that he could support lifting foreign-ownership restrictions on Qantas.
Pilot Ian Woods, who is also a director of Aviation Economics, has raised the possibility of a potential employee bid of up to 25 per cent, which would be worth $500 million.
He says he has written to the Prime Minister, and has also spoken to Opposition leader Bill Shorten about the proposal.
Mr Woods says he has spoken to a New York-based private investor who was involved in the 2006 Airline Partners bid, which failed due to a lack of shareholder support.
But he says the talks are in the very early stages.
“There’s no formal bid or even an informal bid at this stage,” he said.
“What I tried to resurrect were some of the discussions and conversations I had during the Airline Partners bid in 2006, where the view that was held by many of the unions and the workforce then was that employee equity could have a role in the ownership of Qantas.
“I think that doing all that you can to make it financially viable is something that all Australians would be proud to do.”
Mr Abbott has previously rejected calls from Qantas executives, the Labor Party and unions to prop up the airline in order to secure its long-term viability, saying subsidies threaten to become a “bottomless pit” of money.
Qantas says it has not been involved in discussions about an employee bid for a share in the company, and is not seeking a bailout from taxpayers.
The airline insists it remains in a strong financial position due to its large cash balance and asset base.
It has decried the lack of a level playing field, given investment rules forbid foreign investors from holding more than 49 per cent of the company’s stock.
By contrast, Qantas’s main competitor, Virgin Australia, has just raised $350 million from investors that include Air New Zealand, Singapore Airline and Etihad.
Rises in the cost of jet fuel and the strong Australian dollar are also causing problems, the airline claims.
However, critics of the company, including a former Qantas chief economist, has blamed decisions made by the present board for the company’s woes.
Qantas has invested about $1 billion into the Jetstar franchise in Asia, but is yet to achieve significant returns on its money.