Richard Branson uses newspaper ads to urge against financial assistance for Qantas

Updated

Virgin boss Sir Richard Branson has taken out a full-page advertisement in News Corp papers urging the Federal Government not to provide financial assistance for rival airline Qantas.

The Government has indicated it supports lifting foreign ownership restrictions and is prepared to provide extra help for the Flying Kangaroo, which could come in the form of a debt guarantee.

Sir Richard warns that international businesses "should think twice" about investing in Australia if the Government provides assistance.

"Should the Australian taxpayer be forced by the Australian Government to prop up the Qantas Group, as Federal Treasurer Joe Hockey is suggesting, business people worldwide should think twice about investing in Australia for fear of such intervention in their sectors," Sir Richard wrote in the ad.

"Qantas has gone to its shareholders on numerous occasions over the last few years to wage its capacity war against us.

"Now that shareholders have turned that tap off, the company is turning to the Australian taxpayer to try and bail it out."

However, Qantas says it has not sought funding from its shareholders in recent years, and argues that Virgin itself has been backed by deep pocketed, government-owned shareholders itself in the form of Etihad, Air New Zealand and Singapore Airlines.

"There's widespread agreement that Qantas is at a disadvantage because of current policy settings," Qantas said in a statement.

"We've said many times we don't want a handout – what we want is fair fight, which is very much in the best interests of the travelling public."

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Prime Minister Tony Abbott last week gave strong indications that the Federal Government is preparing to lift foreign ownership restrictions on Qantas.

The Qantas Sale Act, brought in under Labor in 1992, prevents more than 49 per cent foreign ownership in the national carrier.

It also prevents any one foreign investor owning more than 25 per cent of the company.

Sir Richard says Virgin is unconcerned with what the Government does with the Qantas Sale Act, but warned against any federal assistance.

"We don't care what the Government does with the Qantas Sale Act," he wrote.

"What is most important is that the Government doesn't provide financial assistance to Qantas.

"It is not right for the industry and it will not benefit the travelling public or the economy."

Opposition urges Government to make decision

It is understood Qantas is lobbying the Government to offer a public guarantee of its debt to secure its credit rating.

The Federal Opposition is demanding the Government makes a decision about whether to provide assistance to Qantas.

Opposition transport spokesman Anthony Albanese says there is a case for the Government to support Qantas in the form of a debt guarantee.

"That's one of the options on the table - that a debt guarantee would be there," Mr Albanese told Sky News.

"That's not government paying cash for Qantas - no-one's suggesting that at all.

"These circumstances have been exactly the same since the downgrade first happened, which was in, from memory, October or maybe November, so this has been around for months.

"There is no reason why, if it's going to make a decision, it should stall making that decision."

Mr Hockey last week said the Government had been "dragged kicking and screaming" into the Qantas debate.

He said on Friday the airline meets several "crucial tests" that he would apply to giving taxpayer money to private enterprises.

Topics: air-transport, industry, business-economics-and-finance, federal-government, government-and-politics, australia

First posted