Australia's government has said it will not block the takeover bid

Margaret Jackson said Qantas shares would slump if a proposed 11.1bn Australian dollar ($8.8bn; �4.5bn) offer failed to get off the ground.

A private consortium including Macquarie Bank is bidding for Qantas.

While the firm's board has backed the offer, two key shareholders have indicated that it is too low.

UBS Global Funds Management and Balanced Equity Management jointly hold just under 10% of Qantas shares.

Share worries

Earlier this month, Australia's government said it would not attempt to block the bid, which if successful would be the world's biggest airline takeover.

While the two investment funds do not have sufficient shares to block the bid, analysts said their reservations over the value of the offer could influence other shareholders.

The bidding consortium needs to secure 90% shareholder backing for the deal to go ahead.

Mrs Jackson told the Australian Financial Review that the 40% of shares in Qantas held by hedge funds would be dumped on the market if the bid failed.

"If anyone thinks this will happen without affecting the (share) price then they have a mental problem with how the market works," she said.

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

Competition looms

Separately, the airline's battle for international passengers moved a step closer, after rival Virgin Blue placed a A$2.6bn order for seven long-haul Boeing jets.

Virgin Blue's new international division is due to launch next year, with the initial aim of offering services to the US West Coast in competition with Qantas.

"This is a significant milestone for Virgin Blue and for Australian aviation," Virgin Blue chief executive Brett Godfrey said.