Qantas Airways Ltd will pay a A$100 million penalty and compensate passengers for selling tickets on thousands of flights it had already decided to cancel, as chief executive officer Vanessa Hudson continues costly repairs to the airline’s battered reputation.

Under an agreement with Australia’s competition watchdog, Qantas will also pay between A$225 and A$450 to more than 86,000 impacted customers as part of a A$20 million remediation programme, the airline said Monday.

The deal settles a fiery legal dispute between Qantas and the Australian Competition and Consumer Commission (ACCC) that last year triggered the early retirement of then-chief executive officer Alan Joyce and led to a boardroom cleanout to repair the company’s brand.

Joyce’s replacement, Vanessa Hudson, is now footing the bill as Qantas attempts to restore its status as a marquee carrier. She kicked off her tenure last year by ploughing extra money into major customer bugbears like on-board catering and call-centre staffing. Last month, she overhauled the frequent flyer business to make it easier for customers to redeem points for flights.

“Today represents another important step forward,” Hudson said Monday.

Shares in Qantas rose as much as 0.5% to A$5.91 in early Sydney trading. The stock has risen 10% this year.

Joyce’s tenure was known for its focus on shareholders, profits and bumper dividends. Hudson’s first few months have put a bigger emphasis on customers.

While Qantas on Monday apologised to passengers and acknowledged its shortcomings as flights restarted after the pandemic, the size of the fine is also a financial letoff. The ACCC was pursuing a record penalty of more than A$250 million to punish Qantas for selling tickets on flights there were never going to take off.

The watchdog claimed Qantas kept on selling tickets - typically for more than two weeks but sometimes longer than a month - on thousands of flights it had already scrapped. Qantas’ misconduct stretched from May 2021 until August 2023, affecting tens of thousands of flights, the ACCC said.

“Qantas’ conduct was egregious and unacceptable,” ACCC Chair Gina Cass-Gottlieb said in a statement. “Many consumers will have made holiday, business and travel plans after booking on a phantom flight that had been cancelled.”

Impacted customers who made a booking two or more days after the flight was cancelled will receive A$225 for a domestic or trans-Tasman flight, and A$450 for an international service. This is in addition to any refund already offered.

  - Bloomberg