The sale of the national icon, dubbed the flying kangaroo, has stirred nationalistic sentiment and reached the top levels of Australian politics, prompting the bidding group to stress that the airline would remain majority Australian owned.

However, Prime Minister John Howard signalled the government was unlikely to interfere in any change of hands of the airline, founded 86 years ago in outback Queensland as an air taxi service.

"I hope that the Qantas we know is the Qantas we keep.

People like Qantas.

It is an icon.

That doesn't mean to say its shares can't change hands," Howard told Australian Broadcasting Corp.

radio.

The offer tops an US$8,6 billion bid for bankrupt Delta Airlines by US Airways Group in November, and would be the biggest private equity buyout in Asia, outside of Japan, if approved by shareholders early next year.

It coincides with a wave of consolidation talk across the industry, including recent merger talks between UAL Corp., parent of United Airlines, and Continental Airlines The offer of A$5,60 a share, 10 per cent above Qantas's last trade on Wednesday, was unanimously endorsed by the Qantas board after the bidders dropped a demand for a break-up fee and simplified other conditions.

The board rejected an offer of A$5,50 on Wednesday.

Qantas shares, publicly traded since 1995, stayed below the offer price all day, suggesting investors were not going to hold out for a better bid.

The shares closed up 3,7 per cent at A$5,28 after touching a record high A$5,37.

Nampa-Reuters

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