Qantas Airways on Wednesday severed a lucrative marketing deal with Tourism Australia after claiming its boss was leading a consortium trying to unseat the airline's management and buy out the company.
The carrier said it had advised the country's official tourism agency it was halting the Aus$50 million (US$52 million) deal "due to a potential conflict of interest of the agency's chairman", former Qantas chief Geoff Dixon.
Dixon ran the national flag-carrier between 2001 and 2008, when Alan Joyce took over. The two men, previously confidantes, are now locked in a bitter feud over the direction the airline is taking.
"This conflict has arisen from the involvement of Tourism Australia's chairman with a syndicate that is actively canvassing fundamental changes to the Qantas Group strategy, including the proposed partnership with Emirates," Qantas said.
"Qantas cannot continue to collaborate with an agency whose chairman is a member of a syndicate committed to unravelling Qantas' structure and direction."
Media reports have said the consortium, which is also said to include retail entrepreneur Gerry Harvey, advertising guru John Singleton, and another former Qantas executive Peter Gregg, have been buying up shares.
The reports say they were scouting for global investors, mainly from China, to back a takeover and stymie Qantas's 10-year tie-up with Emirates, which was unveiled in September but remains before the competition regulator.
The syndicate is reportedly disaffected with the performance of Joyce and the company's floundering share price, preferring to sell off the "Flying Kangaroo's" frequent flyer programme and low-cost offshoot Jetstar.
They were also believed to be lukewarm on the proposed partnership with Emirates, which will see Qantas's hub for European flights shift to Dubai from Singapore, with the airlines cooperating on pricing, sales and scheduling.
Joyce told a media lunch that selling the frequent flyer programme and Jetstar would be a big mistake and said shareholders were behind the current management's strategy.
"We have full support for the strategy that is there," he said.
Joyce wrote to Tourism Minister Martin Ferguson on Tuesday to tell him of the Tourism Australia decision, warning that Qantas would refuse to have any further dealings while Dixon was chairman.
Despite ending the 40-year partnership, Qantas said it remained committed to supporting the tourism industry.
"Not one dollar will be removed from tourism marketing as a consequence of this decision. Rather than providing this support through the federal agency, Qantas will instead look to do so through the states," it said.
Tourism Australia managing director Andrew McEvoy said in a statement the organisation "will consider the matter of Qantas' suspension of future activities later today".
Back in August, Qantas posted its first loss since privatisation in 1995, plunging Aus$244 million into the red due to intense competition in the region, rocketing fuel costs and the strong Australian dollar.
It was a significant reverse from a net profit of Aus$250 million a year earlier and Joyce has set about cutting aircraft orders, dropping unprofitable routes, shedding jobs.
Qantas shares ended 2.24 percent lower at Aus$1.31.