Labor is paving the way for foreign airlines to increase their ownership of Qantas.
In a political compromise to be announced on Sunday, opposition transport spokesman Anthony Albanese will offer the government two concessions to allow more investment in the airline.
Labor will propose to scrap two ownership limits in the Qantas Sale Act. The first restricts ownership in Qantas by an individual investor to 25 per cent and the second limits ownership by a foreign-owned airline to 35 per cent. These amendments are in line with a 2009 white paper commissioned by Mr Albanese.
But Labor will not budge on the key restriction in the Qantas Sale Act - which guarantees the airline stays 51 per cent Australian owned and ensures that most of the airline's 30,000 jobs remain in Australia. Prime Minister Tony Abbott wants to ''unshackle'' Qantas from these laws, allowing the airline to receive cash injections from overseas that would help it compete with Virgin.
Labor has several other conditions it considers ''deal breakers''. Mr Albanese will not support any elimination of requirements that at least two-thirds of the Qantas board be Australians, Qantas' head office to remain in Australia, and the majority of the airline's international maintenance be conducted in Australia.
The announcement is significant as the Coalition is blocked in the Senate by the Greens and the protectionist Clive Palmer, which means negotiating with Labor is the only straightforward way to change the Qantas laws.
In March, Mr Abbott refused to give Qantas a government-backed debt guarantee, despite a vocal public campaign by the airline's chief executive, Alan Joyce.
The Prime Minister said he wanted to free Qantas from the ownership restrictions and allow foreign airlines and companies to invest more in the business.
Declaring that government should not be in the business of running airlines or underwriting their debts, Mr Abbott said at the time: ''The point I make to Bill Shorten and his colleagues is you sold Qantas, now you must free them to maximise their chances of being able to successfully compete and maximise Australian employment for the long-term.''
But Mr Albanese and Labor have long argued that opening Qantas to foreign ownership would send thousands of jobs offshore and potentially jeopardise Qantas' superior safety record and quality control standards.
Mr Albanese has said that getting rid of Part 3 of the Qantas Sale Act - as proposed by the government - would scrap provisions ensuring maintenance, housing of aircraft, catering, flight operations and training stayed in Australia.
''It means that Qantas doesn't have to have a head office in Australia,'' Mr Albanese said during the March negotiations. ''It really gets rid of everything that makes Qantas an Australian airline.''
Since the March decision to deny Qantas a debt guarantee, the politics surrounding the airline have gone quiet, with a policy stand-off between Labor and the Coalition.
There is now an opportunity for the government to pass legislation that satisfies some, but not all, of the Coalition's hopes for the airline.
''If the Coalition is serious about the need for greater foreign investment in Qantas, they should back Labor's modest proposal to lift restrictions consistent with Labor's view that Qantas must remain majority Australian owned,'' Mr Albanese said.
"It is a very good offer from the Labor Party to the government. I would hope the government would accept that offer and Qantas can move on with total majority Australian ownership but with a lot more flexibility within that in order to attract the investment that they need to survive, grow and prosper," he told the ABC's Insiders program.
with Mark Kenny, James Massola, Judith Ireland