Qantas: ACCC Penalty Is Better than Expected

Qantas settled its case with the Australian Competition and Consumer Commission. The case centered predominantly around advertising and selling tickets for flights intended to be canceled. The airline will pay a penalty of AUD 100 million in addition to AUD 20 million in compensation to consumers. The combined AUD 120 million bill looks like a win for Qantas—we had expected total penalties of about AUD 250 million. However, the difference is immaterial to our unchanged AUD 6.10 valuation. At current prices, shares in Qantas screen broadly fairly valued.