By Callum Godde in Melbourne

Qantas has agreed to a multi-million dollar settlement to kill off a class action against its contentious COVID-19 flight credits.

The lawsuit accused the airline of breaching contracted refund obligations to customers who had flights cancelled between the start of 2020 and November 1, 2022.

The $105 million settlement, revealed by Qantas on Friday, is subject to approval by the Federal Court of Australia.

Under its terms, the airline makes no admission of liability.

The airline noted it had previously provisioned for the lawsuit and the increased sum would be recognised outside of underlying earnings in the second half of the financial year.

Qantas shareholders appeared unfazed by the announcement, with shares fractionally down when the Australian Securities Exchange opened on Friday.

Echo Law filed the class action against Australia’s national carrier in 2023, alleging the airline misled customers about their refund options, withheld funds and engaged in a “pattern of unconscionable conduct”.

The firm alleged Qantas breached Australian consumer law by failing to immediately issue refunds and retaining customers’ funds when flights were cancelled in 2020

The airline rejected the claims at the time, declaring it had refunded more than $1 billion to customers impacted by flight disruptions in 2020.

Qantas launched a campaign to encourage customers to use remaining flight credits after Australia’s consumer watchdog indicated a probe into the issue was almost complete.

In August 2023, Qantas removed the expiry date on flight credits issued during the pandemic, meaning customers could indefinitely request a cash refund.