Qantas Freight Provision
Sydney, 13 August 2007
Qantas Chief Executive Officer Geoff Dixon said today that Qantas would make a provision of US$40 million (A$47 million) to cover a potential fine that may be imposed in the USA as a result of conduct undertaken by Qantas' Freight Division.
"Qantas previously disclosed that it had been cooperating with regulators in the USA, Europe, Australia, New Zealand and other jurisdictions in their investigation into alleged price fixing in the air cargo market. These investigations revealed that the practice adopted by Qantas Freight and the cargo industry generally to fix and impose fuel surcharges was likely to have breached relevant competition laws. To date, it has not been possible to quantify any direct or indirect liability associated with these matters.
"On 1 August 2007, the US Department of Justice announced that British Airways and Korean Air had agreed to plead guilty and pay separate US$300 million criminal fines for their roles in conspiracies to fix prices of passenger and cargo flights. British Airways subsequently announced that US$200 million of its fine related to cargo.
"Based on these developments, a decision has been made to make a US$40 million (A$47 million) provision in the 2006/07 Financial Accounts.
"At this stage, it is too early to make a reliable estimate of possible fines in other jurisdictions or of possible liability to third parties under class actions. We expect these amounts will be known over the next two years."
Mr Dixon said Qantas had strict policies requiring compliance at all times with all laws governing its Australian and international operations.
"We have investigated this issue thoroughly and are confident that the unacceptable conduct was limited to a small number of people," he said.
Mr Dixon said that as the matter was before the regulators, it was not appropriate for Qantas to comment further at this stage.
Issued by Qantas Corporate Communication (3638)