Taxpayer to fund Qantas debt

The federal government is likely to provide Qantas with a debt guarantee, which means Australian taxpayers will fund the airline’s debt and its push to increase its foreign ownership, reports say.

Transport Minister Warren Truss revealed on Tuesday that the government was drafting changes to the Qantas Sale Act, which would allow it to be majority foreign-owned.

Related: 5000 jobs could go in Qantas shake-up

"The government is philosophically attracted to levelling the playing field," Mr Truss told reporters in Canberra on Tuesday.

According to Fairfax, the government is also willing to consider relaxing stipulations in the act which require the airline to carry out the majority of repairs and maintenance in Australia.

However, the national carrier warned it would still be making tough decisions to cut $2 billion in costs regardless of assistance.

This will likely include major job cuts – possibly in thousands – to be announced on Thursday.

Unions representing many of the airline's 33,000 workers have fiercely opposed changes to the sale act, as well as the taxpayer-funded debt guarantee, as it would not change its plans to sack people.

A move to allow foreign ownership above the current 49 per cent cap would only embolden the airline to strip its assets, auction jobs off and cut wages, Transport Workers Union secretary Tony Sheldon said.

Related: Qantas refuses to comment on job cut news

"There should be no change to the sales act and no taxpayer underwriting by the federal government until this company comes clean about how they are going to save this airline," Mr Sheldon told reporters.

Qantas is struggling with high debt and will announce a large half year loss on Thursday, as the effects of a fare war with rival Virgin Australia, and its cost base disadvantage with state-backed foreign rivals, bite into earnings.

"We have said that we will be making some tough decisions in order to achieve $2 billion in cost savings over the next three years, which is a consequence of an unprecedented set of market conditions now facing Qantas," the company said.

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Australian Licensed Aircraft Engineers Association federal secretary Steve Purvinas said Qantas management's strategy of feeding money into failed Jetstar franchises in Asia was its major problem.

"We say there needs to be a change at the top of Qantas or people at Qantas need to change their direction," he told AAP.

"As long as the board continues its existing strategy to blow money on these failed Asian airlines funded by Qantas' core business, about 2000 of us (engineers) certainly fear for our future."