(AFP) Australia’s government will try to repeal legislation which restricts foreign ownership in the struggling national carrier Qantas, Prime Minister Tony Abbott said Monday.

Abbott said cabinet had decided against a debt guarantee for the airline, which last week posted a Aus$235 million (US$210 million) loss in the six months to December 31 and announced it would axe 5,000 jobs.

Abbott said cabinet’s decision, reached after two hours of discussions, was “best for our nation and ultimately best for Qantas”.

“Cabinet is not proposing… to offer Qantas a debt guarantee or a line of credit,” he said. “But we will seek to repeal part 3 of the Qantas Sale Act.”

Qantas is battling record fuel costs and fierce competition from subsidised rivals.

It has been lobbying Canberra for a relaxation of the 1992 legislation which stops foreign airlines from owning more than a 35 percent stake in it, and prevents individual foreign shareholders from owning more than 25 percent.

Qantas chief Alan Joyce argues that the cap is hurting Qantas’s ability to compete by restricting access to capital.

Domestic rival Virgin Australia is majority-owned by state-backed Singapore Airlines, Air New Zealand and Etihad.

Abbott said Qantas would still be governed by Foreign Investment Review Board requirements and by the Air Navigation Act, which puts restrictions on Australian-based international carriers.

“They do have to have 51 percent Australian ownership, they do have to have their headquarters and the substance of their business based in Australia,” Abbott said.

But the move potentially opens the way for foreign interests to take a greater stake in the domestic arm of Qantas.

“Obviously under what we are proposing, Qantas International would remain in every sense an Australian airline; Qantas domestic, should there be a distinction, would remain a substantially Australian airline,” Abbott said.

Abbott said he hoped to introduce the legislation this week.

But the conservative government will face problems getting it passed by the Senate (upper house), with Labor and the Greens vowing to block legislation that allows majority overseas ownership.

SOURCE AFP