Airline dispute takes off as Virgin calls in lawyers over Qantas allegations of foreign takeover

QANTAS and Virgin's spat over foreign ownership continues to gather speed - and now the lawyers have been called in.

VIRGIN Australia is calling in the lawyers as a dispute with rival Qantas over foreign ownership continues to escalate.

At the company's annual meeting in Brisbane today, Virgin chairman Neil Chatfield rejected allegations that it was the subject of a foreign takeover and accused Qantas of waging an "orchestrated media campaign" against it capital raising plans.

Mr Chatfield said while he was "not going to waste shareholders time regarding these allegations", the company had "instructed legal advisers to act on our behalf" to deal with them.

The spat took off after Qantas launched an online petition yesterday railing against Virgin's $350 million capital raising, which would see overseas partners Etihad Airways, Singapore Airlines and Air New Zealand increase their stakes in the carrier.

Qantas claims Virgin Australia would be 80 per cent foreign-owned and could use its ``unlimited funds to weaken Qantas in the domestic market and cripple our international business'' through artificially flooding the market with capacity and lowering prices.

Qantas boss Alan Joyce.

Mr Chatfield said the plans, which could also see the international carriers take seats on Virgin Australia's board, would not alter the control of the airline.

He said it would continue to be Australian managed and that the majority of board members would remain independent.

His comments came as Qantas boss Alan Joyce travelled to Canberra to lobby senior government MPs over his claims of a foreign takeover of Australian skies.

Virgin Australia chief executive John Borghetti said the "false allegations by our major competitor" had misrepresented his airline's moves to overhaul its business - which included increasing investment by major airline partners.

He said the airline was instead finally bringing competition to what had been a monopoly in Australian aviation, and that this was resulting in prices going down.

"So to say Virgin Australia is driven by a strategy of uncompetitive low prices ... I find offensive and frankly absurd," he said

Mr Borghetti said the airline's priorities going forward were to make the most of its strategic investment in regional carrier Skywest and budget airline Tigerair.

It also wanted to strengthen its balance sheet - the airline made a $98.1 million after-tax loss for the 2013 financial year - and fast-track growth opportunities.