Byron Kaye and Poonam Behura
SYDNEY (Reuters) – Australia’s Qantas Airways has agreed to pay A$120 million ($79 million) to settle a regulatory claim over the sale of thousands of tickets on already-canceled flights, in a bid to end a reputation crisis engulfing the airline.
The company will split A$20 million between more than 86,000 customers booked on so-called “ghost flights” and pay a A$100 million fine rather than defend the lawsuit it previously promised to fight against Qantas and the Australian competition. the Consumer Commission (ACCC) said on Monday.
The fine is the largest ever for an Australian airline and one of the largest in the world for the sector, although some Australian banks and casino operators have faced stiffer fines for breaking the law.
“We understand that Qantas has failed customers and failed to live up to our own standards,” CEO Vanessa Hudson (NYSE:) said in a statement.
The settlement “means we will be able to compensate injured clients much sooner than if the case had continued in Federal Court,” added Hudson, who began her duties in September, noting that the court still must approve the settlement.
If the court approves, the settlement will resolve a dispute that has featured prominently at a time when Qantas’ brand value has fallen in consumer surveys amid a surge in complaints about canceled orders. After the ACCC filed its claim last August, Hudson’s long-time predecessor, Alan Joyce, tendered his resignation.
“This fine … will send a strong deterrent to other companies,” ACCC Chair Gina Kass-Gottlieb said in a statement.
remove advertising
.
The payout, however, pales in comparison to the A$1.47 billion net profit that analysts on average expect Qantas to report for the year to the end of June, according to LSEG data. People who bought tickets on non-existent domestic flights will receive A$225, while people who bought international fares will receive A$450 in addition to the refund, the airline and the regulator said.
Qantas shares were unchanged in late trading, against a 0.6% rise in the broader Australian market.
“We view today’s result as an incremental positive, removing another post-Covid-19 brand and share price excess,” RBC Capital Markets analyst Owen Birrell said in a note to clients.
Qantas is still waiting to find out how much it must pay nearly 1,700 ground staff sacked in 2020 after a court found the job cuts were unlawful because they were aimed at ending industrial action.
The ACCC case comes months after Australia’s border reopened in 2022 after two years of COVID-19 restrictions, and complaints about flight cancellations and lost luggage soared around the world amid staff shortages.
Qantas argued it faced similar problems to airlines around the world, but the ACCC said its actions breached consumer law. The report said the airline sometimes sold tickets for flights weeks after they were cancelled.
The ACCC’s Cass-Gottlieb noted that the agreement included a promise from Qantas not to repeat such behavior.
($1 = 1.5124 Australian dollars)