Billionaire Richard Branson has urged the federal government to resist helping Qantas, saying the airline's management and service are to blame for its financial woes.
Qantas' rival Virgin Australia on Tuesday received approval from the Takeovers Panel for its planned $350 million equity raising which will allow major foreign shareholders to increase their stake in the airline.
It comes as Prime Minister Tony Abbott this week left the door open to allow greater foreign ownership of Qantas which is subject to laws ensuring it is at least 51 per cent Australian-owned.
Mr Branson, whose Virgin Group owns a 10 per cent stake in Virgin Australia, said it seemed strange that a liberal government would consider tilting the playing field in Qantas' favour.
"It would be grossly unfair and bewilder investors in Australia and worldwide," Mr Branson tweeted on Wednesday.
"If Qantas was better managed and offered the public a decent service it would not be in the financial mess it is currently claiming it is in."
He said the government should encourage competition, not "prop up the weak" when the going gets tough.
Virgin Australia's major shareholders Air New Zealand, Singapore Airlines and Etihad Airways own about 73 per cent of Virgin and plan to take up their full entitlement of new shares.
Qantas, which had been lobbying the federal government to stop Virgin's capital raising, released a statement saying the playing field was tipped in favour of Virgin whose three government-owned foreign airlines covered their losses.
"Qantas doesn't have that luxury and yet our customers have never been better served," the airline said.
"That's thanks to Qantas staff, who are the people responsible for our record customer service ratings."
The escalation of the feud between the two airlines comes after Virgin boss John Borghetti said his company was considering legal action over Qantas boss Alan Mr Joyce's claims that backing from foreign airlines allowed Virgin to run at a loss, thereby undermining competition.
In August Qantas recorded a $5 million profit as the battle for Australian airways reduced local earnings.
