Why did the Qantas share price have such a lousy start to the week?

Qantas has found itself embroiled in a new Federal Court claim.

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Key points

  • The airline's shares were sold off on Monday amid an overall weak day for the sector and an underpayment claim being brought against Qantas by its engineers
  • Collectively, the engineers stated that they had been demoted down the payscale unfairly, which violates both employment law as well as their industrial agreements
  • Qantas remediated a similar issue for its engineers back in 2019 and this could be seen as a continuation of the same problem

The Qantas Airways Limited (ASX: QAN) share price closed 2.51% lower in trade on Monday.

Shares of the iconic airline closed at $5.82 after earlier making an intraday high of $5.94.

Meanwhile, the industrials sector, which Qantas is a part of, also struggled on Monday. In fact, the S&P/ASX 200 Industrials Index (ASX: XNJ) was the worst-performing sector on the market today, losing 2.28%.

Qantas rival Air New Zealand Limited (ASX: AIZ) also finished lower with a 1.35% loss.

Finally, the S&P/ASX 200 Index (ASX: XJO) finished the day almost laying flat, losing 0.16%.

So why did Qantas shares lag the market on Monday? Let's investigate.

What went on with the Qantas share price today?

Qantas shares slipped on Monday as the airline contends with an underpayment claim being brought against it in Federal Court, The Australian Financial Review (AFR) reported on Sunday.

The claim is being initiated by Qantas engineers who state the airline breached the Fair Work Act as well as the graded wage structure in their industrial agreements. These breaches allegedly came in the form of engineers being demoted to lower positions in the pay scale and receiving lower salaries as a result, the reporting said.

It was also noted by AFR that the new lawsuit could be seen as a continuation of Qantas' previous disputes with its engineers. This included a claim of alleged underpayment of salaries made by The Australian Licensed Aircraft Engineers Association (ALAEA) in 2019 that was later remediated by the airline.

When a Qantas spokesperson was asked by AFR for comment, they declined and instead referred to comments they had made relating to the earlier case in 2019:

Qantas is committed to paying its employees in accordance with relevant agreements. In this case, there is a complicated system that determines how our licensed engineers move between pay brackets Errors in this system could result in a combination of under and overpayments to individuals.

Qantas has already made adjustments to pay levels where required. What is at issue is the correct level of backpay, which Qantas has been working in good faith to determine, but is now engaged in needless court proceedings.

Qantas share price snapshot

The Qantas share price has gained around 16.07% year to date. That's soundly beating the ASX 200 Index, which is down by around 4% over the same period.

The company's market capitalisation is around $11 billion.

Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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