Qantas Reaches Agreement with ACCC

• Qantas has reached an agreement with the Australian Competition and Consumer Commission (ACCC) to resolve court proceedings related to flight cancellation processes.
• As part of the settlement, Qantas will implement a $20 million remediation program for affected passengers.
• Customers will receive payments ranging from $225 to $450.
• Qantas will also pay a $100 million civil penalty, subject to Federal Court approval.
• The ACCC is no longer pursuing claims against Qantas regarding wrongful acceptance of payment.
• Over 86,000 customers who booked flights at least two days after the cancellation decision will be compensated.
• Impacted customers will receive $225 for domestic/trans-Tasman flights and $450 for international flights, in addition to any prior refunds or alternative flights.
• Payments will be facilitated through an online portal managed by Deloitte and independently audited.
• Qantas will notify affected customers via email starting next month with claim instructions.
• The financial impact of the remediation program and penalty will be recognized as an expense in the Group's Statutory Income Statement for the year ending 30 June 2024, outside of Underlying PBT.
• The actual payment of the remediation and penalty is expected to occur in the FY25 financial year.

Score: 4

Explanation: The sentiment is moderately negative due to the financial penalties and admission of past failures, although the proactive steps towards remediation and cooperation with the ACCC offer a slightly positive outlook.

• Qantas has reached an agreement with the ACCC, avoiding further court proceedings.
• A remediation program will compensate over 86,000 affected customers.
• The ACCC is no longer pursuing claims of wrongful acceptance of payment against Qantas.
• Qantas is proactively commencing the remediation program before court approval.
• Qantas is investing in new technology to prevent similar issues in the future.

• Qantas faces a $100 million civil penalty for flight cancellation process issues.
• The remediation program will cost $20 million.
• The issues stemmed from inadequate support for customers and insufficient technology and systems following the restart of operations post-COVID.
• The financial impact of the remediation and penalty will be recognized as an expense in the FY24 Statutory Income Statement.

• The Federal Court may not approve the proposed penalty.
• The remediation program may face logistical challenges in reaching and compensating all eligible customers.
• Reputational damage from the flight cancellation issues could persist despite the settlement and remediation efforts.
• The technology upgrades may not fully address the underlying issues that led to the flight cancellation problems.

Qantas aims to restore confidence in the national carrier by updating processes and investing in new technology to prevent similar issues in the future, focusing on a quick and seamless remediation process for customers.

• Qantas Group CEO Vanessa Hudson said: 'Today represents another important step forward as we work towards restoring confidence in the national carrier.'
• Vanessa Hudson said: 'We did not deliver enough support for customers and did not have the technology and systems in place to support our people.'
• Vanessa Hudson said: 'We have since updated our processes and are investing in new technology across the Qantas Group to ensure this doesnt happen again.'
• Vanessa Hudson said: 'We thank the ACCC for their cooperation in reaching this outcome, which means we can compensate affected customers much sooner than if the case had continued in the Federal Court.'
• Vanessa Hudson said: 'We are focused on making the remediation process as quick and seamless as possible for customers.'

This announcement reflects increased regulatory scrutiny on airline practices, particularly regarding flight cancellations and consumer rights, following disruptions caused by the COVID-19 pandemic. Other airlines have faced similar challenges and regulatory actions related to flight disruptions and customer compensation.

• Other airlines, such as United Airlines and American Airlines, have faced scrutiny and fines for similar issues related to flight cancellations and customer service failures.
• The $100 million civil penalty is significant compared to other regulatory fines in the airline industry, highlighting the severity of the issues identified by the ACCC.
• The remediation program, offering $225 to $450 to affected customers, aligns with industry standards for compensating passengers for flight disruptions, although the specific amounts vary depending on the circumstances and jurisdiction.

• Shareholders will be negatively impacted by the financial costs of the penalty and remediation program.
• Customers will benefit from the compensation program, improving their perception of Qantas.
• Employees may experience changes in processes and technology as a result of the implemented updates.
• Creditors may see a slightly increased risk due to the financial strain of the penalty and remediation.
• Suppliers are unlikely to be significantly impacted.

• Qantas will seek Federal Court approval of the proposed penalty.
• Qantas will commence the $20 million remediation program.
• Qantas will notify impacted customers via email starting next month.
• Deloitte will facilitate payments through a dedicated online portal.
• The remediation program will be independently audited.
• Qantas will recognize the financial impact in the FY24 Statutory Income Statement.
• Qantas will pay the remediation and penalty in FY25.

• August 2023: Steps were taken to ensure prompt processing of cancellation decisions.
• 6 May 2024: Qantas announces agreement with ACCC and commences customer remediation program.
• 30 June 2024: The impact of the remediation program and penalty will be recognized as an expense in the Group's Statutory Income Statement for the year ended.
• Next month: Qantas will begin notifying impacted customers via email with details about how to lodge a claim.
• FY25: The actual payment of the remediation and penalty is expected to occur.