Qantas share price U-turns amid danger of a $150 million bill

The Qantas Airways Ltd (ASX: QAN) share price has been one of the talking points in 2024. It has outpaced the broader market and climbed more than 38% this year.

After navigating its way through a number of unsettling turbulence these past few years, the airline has been hit with a new bill set by a Federal Court, after it found the airline illegally sacked employees during the Covid-19 pandemic.

Whilst the news isn't price sensitive, shares in the flying kangaroo did reach highs of $7.50 early in the session today, before settling to $7.42 apiece at the time of writing. Let's tale a look.

Federal Court lays down the law

The Qantas share price has been an investor favourite these past twelve months, outpacing the benchmarks by a country mile.

But it hasn't been the same for everyone involved with the company. Last year a Federal Court upheld its verdict that Qantas illegally sacked 1,700 workers during the pandemic.

Today the Federal Court also laid out the potential costs for Qantas after the decisions were upheld.

Justice Michael Lee said the payments to those affected could range between, $30,000, $40,000, or $100,000, according to The Australian Broadcasting Corporation.

This would reflect certain test cases but will be capped at around 12 months' pay per the Court. The final total remains uncertain.

Some estimates – including the Justice's own figures– hinted that penalties could push the total past $150 million, including $85 million in direct economic losses.

These figures are only estimates for now, and both Qantas and the Transport Workers Union (TWU) need to hash out the particular compensation.

At this point, the airline will likely be back in court to face the facts – at which point we'll know the exact figures.

Justice Lee has pressed Qantas and the TWU to resolve the matter quickly. The case returns to court in November. That could be a time to watch the Qantas share price.

How could this affect the Qantas share price?

This legal battle isn't just about reputational damage—it poses a financial threat too. In its FY24 results, Qantas set aside $70 million for the case.

But today's language from the Court implies the figure could be more than double this amount With the potential bill now reaching beyond $150 million.

The Federal Court also ordered Qantas to pay $100 million in penalties earlier this month, to rectify ticket sales it had made and then cancelled during the pandemic.

Qantas may need to adjust its financial plans if it has to pay both of these large fines.

Red Leaf Securities believes the writing is on the wall for the Qantas share price. According to my colleague Bernd, the firm recently suggested taking some profits in the airline after Qatar Airways recently took a 25% equity stake in competitor Virgin Australia.

Time will tell what all this means for the Qantas share price. For now, it is floating along comfortably in the green for the year.

Foolish takeaway

The Qantas share price faces uncertain times with a set of legal and financial hurdles ahead. The potential payouts could weigh on its balance sheet, but we won't know until the figures are confirmed.

Qantas is up more than 55% in the past year.

The post Qantas share price U-turns amid danger of a $150 million bill appeared first on The Motley Fool Australia.

Motley Fool contributor Zach Bristow 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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