The deal look set to take off - if shareholders approve

The offer, from a private consortium including Macquarie Bank, would make it the world's biggest airline takeover.

Treasurer Peter Costello said the group had agreed to a range of conditions - which include Qantas remaining Australian owned and controlled.

Regional services to remote spots have also been secured.

Other terms accepted by the consortium included retaining Qantas' popular frequent-flyer scheme and carrying out all repairs and maintenance in Australia.

Australia's Foreign Investment Review Board said that restricting foreign ownership to 49% would not breach laws.

The A$5.60-a-share offer from the consortium must now be approved by Qantas shareholders.

Iconic status

In addition to Macquarie Bank, Australia's largest investment bank, the Airline Partners Australia takeover consortium also includes Australian finance company Allco, US firm Texas Pacific Group and Canada's Onex.

Despite suffering from the steep increase in fuel prices in recent years, Qantas remains one of the few global carriers to make a profit.

Australian Prime Minister John Howard had earlier said he wanted the airline to maintain its traditional character.

"I hope that the Qantas we know is the Qantas we keep," he said.

"People like Qantas, it is an icon."