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Qantas has agreed to pay a penalty of A$100m (£52.7m) to settle a fiery legal battle with the Australian competition watchdog for selling thousands of tickets for cancelled flights.

The airline will also pay around A$20m (£10.5m) in compensation to nearly 87,000 victims of its so-called “ghost flights” policy.

The settlement ends a landmark legal tussle between the Australian Competition and Consumer Commission and Qantas that forced the abrupt exit of Alan Joyce as CEO last year as well as a boardroom cleanout to undo reputational damage.

Qantas was accused of advertising and selling more than 8,000 flight tickets that it had already cancelled in its internal system. The airline apologised to its affected customers on Monday and said it was focused on making the “remediation process as quick and seamless as possible for customers”.

“Qantas will commence a projected $20 million remediation program for impacted passengers, with payments to customers ranging from $225 to $450, and subject to the approval of the Federal Court of Australia, will pay a $100 million civil penalty,” it said in a statement.

The airline said over 86,000 flyers who booked a flight two or more days after the cancellation decision had been made will be given compensation as part of this programme.

While domestic customers will receive a compensation of A$225, international customers will get A$450 on top of any refund or alternative flight already offered to them.

Qantas Group CEO Vanessa Hudson acknowledged it “fell short of our own standards” and let down customers after flights resumed after the Covid shutdown.

“We know many of our customers were affected by our failure to provide cancellation notifications in a timely manner and we are sincerely sorry,” she said.

“The return to travelling was already stressful for many and we did not deliver enough support for customers and did not have the technology and systems in place to support our people.”

The competition watchdog’s chair, Gina Cass-Gottlieb, said Qantas admitted as part of the settlement that it had misled customers.

“Qantas’s conduct was egregious and unacceptable. Many consumers will have made holiday, business and travel plans after booking on a phantom flight that had been cancelled,” she said.

The settlement, she added, sent "an important message to companies across the economy that breaches of the Australian Consumer Law are serious and will result in material fines”.

The settlement has to be approved by the Federal Court to commence the remediation programme, which is not expected to start until 30 June.

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