Qantas sets $40m aside for fines

Qantas has set aside $40m (£20m) to cover possible fines and litigation for price fixing as it became the latest airline to admit it is embroiled in the competition authorities' inquiries.

British Airways has been at the centre of the investigation into fixing the price of fuel surcharges for passengers and cargo after admitting it had engaged in anti-competitive behaviour. The UK's Office of Fair Trading and the US Department of Justice dished out record fines totalling £270m to BA, while Korean Air was also fined £150m by the US authorities related to fuel surcharges. BA has made a £350m provision to cover the fines as well as potential class actions related to the scandal. Virgin Atlantic and Lufthansa, the two other airlines involved in the investigations, have ducked punishment after informing the authorities of the anti-competitive behaviour.

Qantas, the Australian national airline that was founded in the early 1920s, said that it had co-operated with authorities investigating price fixing in the cargo market and admitted that its activities had "likely" breached competition laws.

Geoff Dixon, the chief executive of Qantas, said: "We have investigated this issue thoroughly and are confident that the unacceptable conduct was limited to a small number of people." Mr Dixon said it was too early to quantify fully the full financial impact of potential fines and litigation and that it could take two years before the total effect is clear.

Analysts were surprised at the timing of the announcement as it comes only days before Qantas reports full-year results. Following the lead of BA, the company is expected to report strong profit momentum despite the bad publicity surrounding the sector as a result of lower fuel prices and recent cost cutting.

Qantas was in the headlines earlier this year after the private equity company TPG unsuccessfully tried to buy the airline, alongside Australia's Macquarie Bank. TPG is also working with BA on a bid for Spanish carrier Iberia.