The Abbott government’s chances of getting its proposed Qantas deregulation through the Senate have been dealt another blow with crossbench senators Nick Xenophon and John Madigan announcing their opposition to the plan.



The senators, who could see their influence increase if the rerun of the West Australian Senate election on April 5 reduces the number of votes the Coalition can call upon, were both highly critical on Tuesday of the government’s plan to remove all requirements for the national carrier to be located in Australia, be majority-owned and run by Australians and to employ Australians.



The plan is also opposed by Labor, the Greens and Clive Palmer’s Palmer United party. Along with the opposition by the two independent senators this means it has no chance of passing the Senate.



Independent senator Nick Xenophon, a fierce critic of the current Qantas management, said he would not support the proposed amendments to the Qantas Sales Act.



“No, I won’t support them. This is a red herring, the real problem here is the failed strategy pursued by Qantas management,” Xenophon told Guardian Australia.



Madigan, of the Democratic Labour party, said it appeared the Abbott government’s strategy was “to fly the white flag and surrender Australia to world markets”.



“I am extremely wary, extremely sceptical about this idea,” he said.



“I am very cynical about the arguments being put forward and I wonder whether this will mean we are exporting our jobs and our wealth creating assets overseas.



“And I think the government is sending out entirely contradictory messages; they say they want to leave it to the market but then they say there are all these other safeguards in place, they say they want a level playing field but we know other governments stand behind their airlines so if we really want a level playing field then that is what we should do, too,” Madigan said.



Palmer issued a statement Tuesday reaffirming his opposition to the idea.



Blaming Qantas’s problems on “board and management failure”, Palmer said the airline was a “vital part of Australia’s fabric” and the government had a moral obligation to ensure it remained in Australian hands.



Senators-elect David Leyonhjelm and Bob Day have both said they would support the government’s proposed changes, but without votes from Labor, the Greens, Palmer United party, Xenophon and Madigan the changes cannot pass the new Senate.



Sources said federal transport minister Warren Truss told coalition MPs at their weekly party room meeting that the government had no ‘'plan b’' if its amendments did not pass the Senate, although a party spokesman said he had no recollection of the comment.



The opposition leader, Bill Shorten, said the Coalition’s plan for Qantas would take at least two years before it could be implemented, and accused the government of being “single-minded zealots” and “extremists” who were acting on a “great rush of blood to the head”.

He told parliament demerging the business would take time, during which thousands of jobs would be lost offshore.

Senior government ministers hit the airwaves on Tuesday attempting to build pressure on Labor to support the changes.



Abbott said: “I just say to the party which sold Qantas, the Labor party, now it’s time to free Qantas so that Qantas can have a future as one of the great airlines.”



The treasurer, Joe Hockey, told the ABC that Labor had been “skiing down the hill in favour of privatisation, in favour of removing foreigner ownership restrictions and near the bottom of the hill, Bill Shorten puts up his hands and says, ‘let’s go ski back up the hill’”.



Hockey insisted the government’s approach in attempting to push changes to the Qantas Sale Act through parliament was “not about politics” but instead a result of “good policy”.



Asked whether the government was ignoring the legislative reality, Hockey urged senators to pass the government’s bill.



“I would say to them, if they care about Qantas workers, if they care about Qantas jobs, pass the legislation and free up Qantas,” he told Sky News.



The secretary of the Australian Council of Trade Unions, Dave Oliver, said Qantas employees were angry and upset at the government’s decision to pursue changes that would see jobs go offshore.



Oliver said he had a message for the Abbott government: “Don’t play politics with the lives of tens of thousands of workers at Qantas; they can still step up and provide the debt guarantee … It is not acceptable we have a government that simply wants to leave it to the market.”



Virgin Australia welcomed the government’s decision to reform the act rather than offering its competitor a debt guarantee, saying it would foster “competition in the Australian aviation market”.



But Qantas continued to urge the government to consider a debt guarantee – an option the government had previously said was under active consideration but which Abbott has now ruled out.



Qantas said: “We need immediate action to address the imbalance that has been allowed to persist for almost two years – namely Virgin’s unlimited ability to access foreign capital from government-owned airlines to fund a loss-making strategy against Qantas.



“If this proposal by the government to change the Qantas Sale Act is not passed, we would expect the government and the parliament to consider alternative measures to balance the unlevel playing field in Australian aviation.”



Abbott appeared to suggest Qantas management might be part of the problem.



“Look, if you go back over the last decade, for much of the time Qantas has been hugely profitable. Now, under good management, there is no reason why Qantas cannot be very profitable; there’s no reason why Qantas can’t continue to be one of the world’s great airlines,’’ he said.



After what the prime minister described as a “strong and spirited” two-hour cabinet discussion, he announced the government would introduce amendments by Thursday to remove restrictions in the Qantas Sale Act. The loan guarantee sought by Qantas – and until just last week very favourably discussed by government ministers – would not be forthcoming.



“This decision says something significant about this government. We do not believe in government by chequebook … We don’t believe in any normal circumstances that government should be playing favourites between private businesses,” Abbott said, insisting Virgin was every bit as Australian as Qantas because it also employed Australian people.



The amendments would leave the carrier with little option but to follow rival Virgin’s example and split its operations into a domestic business which could attract foreign owners and an international business that would have to remain majority Australian-owned in order to benefit from government-negotiated international landing rights.



Under either the existing WA result (three Liberals, one Labor, one Sports party and one Green) or the original result that the ALP and the PUP wanted to stand (three Liberals, two Labor, one PUP) the government could have probably expected four votes in favour of most of its legislative proposals and two against from the six WA senators.



If a new WA election resulted in the more usual breakdown of three Liberals, two Labor and one Green, or two Liberals, two Labor, one Green and one PUP or conservative-leaning independent, it would mean the government could expect three votes at most, handing more power to the crossbenchers.