The Qantas Airways Ltd (ASX: QAN) share price is under the spotlight after the airline announced the result of the COVID class action.
Qantas is Australia’s largest airline. It also owns Jetstar, Qantas loyalty (points), and a freight business.
COVID class action settled
The airline announced in an ASX statement that it has reached an agreement to settle the class action about flight credits during the COVID pandemic that was brought against the airline in August 2023.
Under the terms of the agreement, Qantas has agreed to pay $105 million, with no admission of liability.
The class action was brought after flights were scheduled to depart between 1 January 2020 and 1 November 2022 that were cancelled by Qantas and included allegations that the airline breached its contractual obligations regarding refunds.
In August 2023, Qantas removed the expiry date on flight credits issued during COVID, meaning customers can request a cash refund indefinitely.
Qantas noted that the settlement is subject to approval by the Federal Court of Australia.
In terms of financials, Qantas said it has previously made a provision for this matter and an increase reflecting the settlement will be recognised outside of its underlying earnings in the second half of FY26. The settlement amount will be paid to a Court-approved settlement administrator, with payment currently expected in the first half of FY27.
Is the Qantas share price a buy?
That’s a very interesting question considering it’s down 17% in the past month and 24% in the last six months.
Higher oil prices are certainly a headwind for the airline’s costs and shorter-term profitability. The business was able to increase airfares a few years ago following the Russian-Ukraine war. But, that inflation was amid strong demand by households (and businesses).
Will there be the same level of demand this time around? We’re entering this period without the same booming economy.
As a long-term investment idea, I think Qantas could still be a good opportunity, but I’m expecting plenty of volatility ahead and the conflict may take longer to resolve.
