​​Australia’s flagship airline Qantas has agreed to pay $120 million Australian dollars ($79m) to settle a lawsuit over the sale of tickets for already cancelled flights.

The airline will pay a fine of 100 million Australian dollars ($66m) and provide compensation of 20 million Australian dollars ($13m) to more than 86,000 customers after advertising seats for thousands of “ghost flights” in 2021 and 2022.

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“Qantas’ conduct was egregious and unacceptable. Many consumers will have made holiday, business and travel plans after booking on a phantom flight that had been cancelled,” said Australian Competition and Consumer Commission Chairperson Gina Cass-Gottlieb in a statement on Monday.

“Importantly, it demonstrates that we take action to ensure that companies operating in Australia communicate clearly, accurately and honestly with their customers at all times,” Cass-Gottlieb added.

Qantas Group CEO Vanessa Hudson said the settlement, which is subject to court approval, was an “important step forward as we work towards restoring confidence in the national carrier.”

“When flying resumed after the COVID shutdown, we recognise Qantas let down customers and fell short of our own standards. We know many of our customers were affected by our failure to provide cancellation notifications in a timely manner and we are sincerely sorry,” Hudson said.

“The return to travelling was already stressful for many and we did not deliver enough support for customers and did not have the technology and systems in place to support our people.”

Qantas, which reported an annual profit of $1.1bn last year, has faced a barrage of controversies in recent years over rising ticket prices, claims of poor service standards, and the firing of 1,700 ground staff during the COVID-19 pandemic.

In September, then-CEO Alan Joyce brought forward his retirement by two months after 15 years in the top job amid widespread criticism of the airline.