Qantas Airways denieslobbying against Etihad's Virgin stake

Qantas Airways has denied reports that the airline had warned politicians it may go under if Etihad Airways was allowed to increase its stake in local rival Virgin Australia.

According to Qantas spokesman, chief executive Alan Joyce and a number of executives met MPs in Canberra this week, where they discussed a range of issues.

However, he described a Fairfax Media report today as "pure speculation" that the airline management had told the MPs the airline would go under if Etihad increased its stake.

Joyce had spoken earlier about the required form of the Qantas Sale Act,  which placed restrictions on the carrier's ownership structure that its peers were not subject to, in order to create a level playing field.

According to Fairfax Media, Qantas told the MPs the Abu Dhabi-based Etihad would "cross-subsidise Virgin's domestic business with the specific aim of weakening Qantas".

"Virgin/Etihad will be able to flood the market with capacity until its competition is forced to significantly reduce its own operations or worse," Fairfax Media quoted a Qantas briefing paper as saying.