Qantas to Pay $120 Million
Qantas Airways of Australia has reached a settlement with regulators, agreeing to pay A$120 million ($79 million) to resolve a lawsuit related to the sale of numerous tickets for flights that had been previously canceled.
This move aims to mitigate the ongoing reputational damage faced by the airline.
Settlement Details
Qantas Airways will allocate A$20 million to over 86,000 customers impacted by the sale of tickets for canceled flights, referred to as "ghost flights."
#BREAKING: Qantas has reached an agreement with the Australian Competition and Consumer Commission (ACCC) to settle a lawsuit against the airline for selling seats on flights that had already been cancelled. https://t.co/FVL1zp6uFR
— ABC News (@abcnews) May 5, 2024
Source: Twitter/ABCNews
Additionally, the company will pay a A$100 million fine instead of contesting the lawsuit it had previously intended to fight, as announced by both Qantas and the Australian Competition and Consumer Commission (ACCC) on Monday.
This fine marks the largest ever imposed on an Australian airline and is one of the largest globally within the sector.
CEO Vanessa Hudson acknowledged the company's failure to meet its own standards and its disappointment in letting down customers in a statement. She emphasized that the settlement will expedite compensation for affected customers compared to the prolonged legal process in Federal Court, pending approval from the court.
Hudson assumed her role as CEO in September.
Impact on Brand Value and Leadership Change
Consumer surveys showed a significant decline in the brand value due to a surge in complaints regarding flight cancellations. Following the ACCC's lawsuit filing last August, Alan Joyce, Qantas's long-serving CEO, accelerated his retirement.
Regulatory Response and Market Reaction
ACCC Chair Gina Cass-Gottlieb stated that this penalty would serve as a strong deterrent to other companies. Despite this payout being considerably less than the A$1.47 billion net profit forecasted by analysts for Qantas, customers who purchased tickets for nonexistent domestic flights will receive A$225, while those with international fares will receive A$450, in addition to a refund, as announced by the airline and the regulator.
Qantas shares were up 0.3% during the mid-session, in line with the broader Australian market.
Overall, the settlement reflects Qantas's attempt to address the legal and reputational challenges stemming from the sale of tickets for canceled flights, highlighting the importance of consumer protection and regulatory compliance in the aviation industry.
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