Australian airline Qantas Airways said on Monday (May 6) it had agreed to pay a penalty of A$100 million (S$89 million) to settle a lawsuit that accused it of illegally selling thousands of tickets for flights that had already been cancelled.

The penalty is subject to the approval of the Federal Court of Australia, it said in a statement.

As part of the settlement with Australian Competition and Consumer Commission (ACCC), Qantas will start an additional A$20 million remediation programme for passengers affected by the cancellations, with each impacted customer receiving payments of between A$225 and A$450, the airline said.

"We are pleased to have secured these admissions by Qantas that it misled its customers, and its agreement that a very significant penalty is required as a result of this conduct," ACCC Chair Gina Cass-Gottlieb said in a statement. "The size of this proposed penalty is an important milestone in enforcing the Australian Consumer Law."

Qantas was sued last August by the ACCC, which had alleged that in some cases, the airline's flights were on sale for several weeks after cancellation.

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