Well, the news that Qantas Airways Ltd (ASX: QAN) shareholders have long been dreading has finally come to pass. The airline has learnt of the punishment that it must pay for the unlawful dismissal of 1,820 baggage handlers that occurred in 2020.
This morning, Qantas informed the market that the Federal Court has decided to impose a final penalty of $90 million for the unlawful dismissal of those 1,820 employees during the worst throes of the 2020 COVID pandemic. It is one of the largest corporate fines ever issued.
It seems investors were expecting this kind of fine, though. Qantas shares have had a mixed reaction to this news today. The national carrier initially dropped in early trade this morning, falling almost 1% at one point to $11.52 a share. Qantas shares subsequently rebounded, actually making it into positive territory for a while, and climbing to a high of $11.72 around midday today.
At the time of writing, though, Qantas has fallen back into red territory and is currently going for $11.60 a share, down 0.26%.
The Flying Kangaroo cops a record fine
Federal Court Justice Michael Lee wasn't exactly kind in his judgment. He noted that, following the initial unfavourable judgement in 2021, then-CEO Alan Joyce responded "Not at all" when asked if he had any regrets about the sacking and outsourcing of the ground handling operations. He then went on to say that, "We were in the middle of the biggest crisis in our history, we had to make dramatic action for us to survive. We fundamentally disagree with the ruling, we're going to appeal it".
Lee then added, "I accept Qantas is sorry, but I am unconvinced that this measure of regret is not, at least in significant measure, a result of what the Full Court… described as "the wrong kind of sorry".
In its response today, Qantas took a different approach. Here's what now-CEO Vanessa Huson told the market:
We sincerely apologise to each and every one of the 1,820 ground handling employees and to their families who suffered as a result. The decision to outsource five years ago, particularly during such an uncertain time, caused genuine hardship for many of our former team and their families.
The impact was felt not only by those who lost their jobs, but by our entire workforce. Over the past 18 months we've worked hard to change the way we operate as part of our efforts to rebuild trust with our people and our customers. This remains our highest priority as we work to earn back the trust we lost.
Qantas also noted that it has paid $120 million into a compensation fund for all affected employees.
Where to from here for Qantas shares?
Investors will undoubtedly be glad to see the back of this saga. Judging by the market's reaction today, investors were expecting a penalty at least in the ballpark of the $90 million fine that was handed down. Even so, anyone who has held Qantas shares for more than a few months has done exceptionally well out of them.
At current pricing, this ASX 200 travel stock is up an astonishing 27.5% year to date. The airline is also up a whopping 91.7% over the past 12 months, and up more than 140% since October 2023.
Saying that, at least one expert thinks the best might be behind Qantas, at least for now. As we covered at the end of last month, brokers at Macquarie have given the airline a 'neutral' rating, with a 12-month share price target of $10.40.
Let's see what Qantas has to say when it delivers its final results for FY2025 on 28 August.
