Two Qantas passenger jets cross each other at Kingsford Smith International airport in Sydney in this file picture.

Sydney - Limiting foreign ownership in Qantas Airways to 49 per cent is a handicap that ought to be removed, Prime Minister Tony Abbott said Friday.

“I think it would be perfectly appropriate to unshackle Qantas,” he told reporters.

“Let's not have Qantas competing with Virgin and others with one hand tied behind its back.”

Qantas is pushing the government to either lift ownership restrictions or underwrite the loss-making airline's debt.

It argues that changes are needed to fight off competition from Virgin Australia and other airlines that can tap unlimited capital from their foreign principals.

Qantas had 40 per cent of the outbound market in the 1980s, a proportion now at 16 per cent.

It shares the domestic market almost equally with Virgin, in contrast to a 65-per-cent stake five years ago.

Abbott has ruled out a partial re-nationalisation of the former flag carrier but may have to give it a debt guarantee because Labor and the Greens would vote against any proposed changes to the 1992 Qantas Sale Act to lift ownership restrictions.

Labor and the Greens want Qantas to remain a majority locally owned company. - Sapa-dpa