Tony Abbott says he supports changing the law to allow Qantas to be majority overseas-owned, but won't be offering the airline a 'free ride on the taxpayer'.
The national carrier says it is hamstrung by the Qantas Sale Act - introduced when Labor sold the airline in the 1990s - which caps foreign ownership of the company at 49%, thereby limiting its access to capital.
Qantas's chief executive, Alan Joyce, admits there is little political and community appetite for changing the law, and has asked the government to consider other options such as a debt guarantee.
The prime minister says the laws are a shackle on Qantas and it is appropriate to unshackle the airline.
Let's not have Qantas competing with Virgin and others with one hand tied behind its back, Abbott told Fairfax radio on Friday. But I do have to say there is no free ride on the taxpayer for private companies.
Labor remains opposed to allowing majority overseas ownership of Qantas but is open to the government providing an assistance package.
Virgin says it is happy to see Qantas relieved of its ownership restrictions, but disputes the need for government support.