From the AFR:
Ratings agency Moody’s placed Qantas on review for a possible downgrade to its investment grade ratingbecause of its deteriorating financial situation.
Mr Truss, who holds the transport portfolio, was backed by Treasurer Joe Hockey in pushing back against a bailout for Qantas but has not ruled it out. The airline has placed unprecedented pressure on the government to intervene, asking for it to guarantee Qantas’s debt.
…Mr Joyce’s concerns struggled to convince Mr Truss, who made the point “the government isn’t a banker” while also warning that “clearly the government is not going to retrospectively change laws to disadvantage Virgin Australia”.
Qantas’s management has argued for an equivalent of the Qantas Sale Act, which restricts foreign ownership in Qantas to 49.9 per cent, to apply to Virgin so the playing field was more level.
Another option put forward by Qantas was for the government to take equity in Qantas.
…Mr Truss said it was incumbent upon the airline to restructure its way out of its current difficulties with the government’s duty to create a favourable business environment.
Rather than take an equity stake in the airline it once privatised, the government may consider a direct guarantee, by recognising it as a government-related entity, alongside the four major banks.
No. This is not the right response. The last thing we need is more confusion around moral hazard. Qantas is not a nationally strategic business and even if it were it’s a private company. What to stop every other mismanaged duopoly claiming the same thing? Should we guarantee Woolies, Toll, Fosters, Leighton, Fairfax, QBE, Telstra etc if they stuff up their market power? They can all claim to be strategic.
A government guarantee is not appropriate unless taxpayers are also remunerated for the risk with a discounted equity stake and board seats. If Qantas has any brains that will be last thing that it wants.
The only thing that is unfair about this is that Qantas can’t find the equity partners that it needs with the foreign ownership restrictions.
Scrap them and all protections and let it compete.
