The Australian government has pledged to scrap laws that prevent its national carrier Qantas from falling into foreign control, the Sunday Times reported.
Tony Abbott, the Australian prime minister, has backed calls for the airline to be “unshackled” from laws that limit foreign ownership to 49%.
Qantas’s credit rating was recently downgraded to junk status by ratings agency Standard & Poor’s after a shock profit warning, triggered by rising fuel costs and falling passenger numbers.
The airline has claimed that Australian ownership rules have hindered its growth and benefited rival Virgin Australia which has gained investment from Etihad, Singapore Airlines and Air New Zealand.
Allowing Qantas to team up with a foreign partner would free it to compete on a “level playing field”, Abbott said.
Qantas said: “Access to foreign capital has become a big factor in this market and Qantas is denied the same access as its competitors.”
Air New Zealand, Singapore Airlines and Etihad Airways raised their combined stakes in Virgin Australia to 67% last week.