Tony Abbott is refusing to offer Qantas a lifeline after the Flying Kangaroo slashed 5000 jobs and cut key routes out of Perth in the airline industry's darkest day since the Ansett collapse 13 years ago.
Just two weeks after Treasurer Joe Hockey identified Qantas as a special case, the Prime Minister appeared to rule out granting the struggling airline a debt guarantee.
Instead, Mr Abbott said the Government would seek to abolish the Qantas Sale Act that mandates the airline is majority Australian-owned, with headquarters in Australia.
But with Labor, the Greens and Palmer United Party opposed to allowing Qantas to become foreign-owned, the airline's future is now at the mercy of an unpredictable Senate.
In response to a $235 million loss, Qantas chief executive Alan Joyce announced he would sack 5000 of the airline's 33,000 workforce, including 1500 from management and "non-operational roles".
Wages will be frozen across the company, Mr Joyce's take-home pay will be cut 36 per cent and there will be no pay rises or bonuses considered until the company turns a full-year profit. Qantas will cancel its daily Perth to Singapore service from May 12, and defer delivery and sell more than 50 planes, including eight A380s. The company hopes to save $2 billion in the next two years. Only the domestic network and its frequent flyer program turned profits of $51 million and $146 million respectively.
Qantas International sank to a loss of $262 million and Jetstar had a $91 million loss.
Despite Qantas' restructure, the Government is not convinced it goes far enough.
_The West Australian _ believes the Government remains concerned about its management, complex corporate structure and claims of cost-shifting between Qantas and Jetstar.
Mr Abbott signalled a debt guarantee, the only concession so far directly sought by Qantas, was unlikely.
"The difficulty is this - what we do for one business, in fairness, we have to make available to all businesses," he said.
Some Liberals were privately surprised that the PM had so firmly spoken against a debt guarantee when Mr Hockey had been at pains a fortnight ago to explain why Qantas was a special case. "I think Joe is genuinely concerned about the potential for Qantas to go bust," one senior Liberal said.
Opposition Leader Bill Shorten said it seemed the Government did not know how to handle the situation.
"If the Government didn't have the ticker to allow the Americans to buy a share of GrainCorp, well Qantas is GrainCorp on steroids and they are going to panic at making a decision," he said.
Mr Joyce dismissed suggestions he stand down and said the company was in a fight for its life. "We are facing the toughest conditions Qantas has ever seen," he said. "This performance by our airlines is unacceptable and the current position is unsustainable."
Independent senator Nick Xenophon, who wants an independent inquiry with judicial powers to look at the company, accused Mr Joyce, chairman Leigh Clifford and the airline's board of "trashing" Qantas.
"All Alan Joyce's board seems to have done is bring an icon to its knees," he said.
Former Qantas chief economist Tony Webber said even changing the Qantas Sale Act was unlikely to salvage the company. "No one would invest in a company that's experienced a record loss, weak earnings, hasn't paid a dividend since 2005 and their share price has dropped from over $5 to almost $1," he said.