Any takeover would be subject to strict regulations

Qantas' shares hit a seven-year high on Wednesday following news of an approach from Macquarie Bank and Texas Pacific.

However, the airline's shares slipped 3% on Thursday on concerns that any bid could face fierce opposition.

The bid proposal, estimated at 10.3bn Australian dollars ($8bn; �4.2bn), comes before elections in 2007.

Analysts warned that significant hurdles remain before any possible takeover.

"With a federal election looming next year, the political fallout from potential offshoring of high skilled jobs is [also] likely to remain a consideration," said Paul Ryan, an analyst with Goldman Sachs JBWere.

'Extremely concerned'

There are concerns that a possible takeover could not only lead to job losses in Australia - by transferring some 6,000 maintenance jobs to China instead - but also that unprofitable routes would be eliminated.

The unions have been strongly against any acquisition, saying they are "extremely concerned" and opposed to such plans.

"We think it should be dealt with politically before we look at any other options," said Doug Cameron, national secretary of the Australian Manufacturing Workers' Union.

Under government rules, there is a cap of 25% for any single investor in Qantas, while stakes owned by foreigners cannot exceed 49% and foreign airlines cannot own more than 35%.

Macquarie has said it would be restricted to owning no more than 15% of the flagship carrier due to its stakes in airports.

Any final decision regarding ownership over foreign control of Australian assets lies with Australia's Treasurer.