Qantas Sale Act: What impact would any change have?
Prime Minister Tony Abbott has announced plans to changes the Qantas Sale Act, giving the airline the option of restructuring its business and allowing its domestic arm to be majority foreign-owned.
Political correspondent Emma Griffiths looks at what the changes will mean if they are passed.
What does the Federal Government want to do?
Amend the Qantas Sale Act to remove foreign ownership restrictions, stipulations that it keeps the name "Qantas" and that its head office and "principal" operational centres for its planes and key services be located in Australia.
What impact could that have on jobs?
The Government wants to strip away legislation that forces Qantas to house and maintain its planes in Australia and keep catering, flight operations, training and administration facilities based here, too. That would allow Qantas to move facilities - and jobs - offshore where costs and wages are cheaper. It currently employs about 32,000 people.
However, former Qantas chief economist Tony Webber says it is unlikely the airline could shift too many of those jobs overseas: "There are additional opportunities in relation to outsourcing some of its maintenance, so there may be potential cost savings there, but they'll be relatively trivial."
What other limitations are there on Qantas ownership?
Even if the ownership limits in the Qantas Sale Act are removed, to maintain access to international air carriage rights Qantas will need to remain majority Australian owned. However, without the act, Qantas can restructure its business, like Virgin Australia did, so the international division is in a separate company from domestic, allowing the domestic division to be majority foreign-owned while international stays majority Australian and keeps its overseas air rights.
Will foreign investors be attracted to Qantas?
If Qantas splits off its international arm, then it could remain part of the Qantas group or be completely sold off (to a majority of Australian shareholders). Both Tony Webber and aviation analyst Neil Hansford say Qantas's loss-making international division is not attractive to investors and that might deter them from investing in the domestic airline if international continues to be part of a bigger corporate group.
If it were totally split off, both analysts say international would struggle to find investors. Mr Hansford says removing section 3 of the Qantas Sale Act is therefore unlikely to assist the loss-making international division at all. However, Mr Hansford says foreign investors are likely to invest in a separate Qantas domestic which he describes as, "one of the most attractive airline investments in the world."
What does Qantas say?
Show me the money. It has welcomed the move to "level the playing field" in a legislative sense, but it says it needs "immediate action" and still wants a Government debt guarantee. That would allow it to borrow funds at a much lower interest rate. But the Prime Minister has canned the idea, saying if the Government did it for one business, it would have to do it for all.
Will Parliament pass it?
Not likely. The Government has the numbers in the House of Reps, but in the Senate it needs Labor or the Greens to agree – and they won't. When the Senate changes on July 1, the Government will still need six extra votes from a micro-party crossbench of eight. But Palmer United Party (three votes) and Senator Nick Xenophon say they won't support the change either, so no joy there. (The re-run of the WA Senate count could change PUP's vote count but it's unlikely to change the situation.)
What happens next?
Stalemate. And a nasty row over jobs between the major parties pitting business against the unions. Both major parties see political gain in this fight. It could take a good year – if not much longer – to resolve.