Another day, another surprise profit upgrade from Qantas which will now surely trigger a class action from shareholders who followed the board’s advice and quit their shares earlier in the year during the $11 billion Airlines Partners Australia bid.

As someone who sold down in March at $5.30 when the directors were talking doom and gloom if the $5.45 private equity bid failed, I’m more than happy to be the named plaintiff in what is a no-brainer lawsuit, provided someone else will fund it. Discussions are underway with one party but nothing has materialised yet.

It was simply outrageous of the board, faced with a massively conflicted management, to let the bid close in early May, 10 months into the financial year, with a profit forecast that turned out to be $130 million light. Now, they’ve done it again, for the fifth time in a year, lifting the profit forecast for 2007-08 from a 30% increase to 40%, which translates to $1.4 billion in pre-tax earnings.

Even the main business commentators are starting to get more aggressive.
 John Durie wrote the following  in The Australian today: “Qantas’s stock price matched its all-time high yesterday of $6.06 a share, before easing to close up 2.8 per cent at $5.91 a share. Not bad for a company whose then chairman said its stock price would tank if shareholders rejected the buyout attempt.” James Hall was tougher in The AFR, pointing out that the re-rating argument was a “great myth” and the Qantas share price surge is entirely driven by surging profits – after all, the price-earnings ratio remains at about 11.

Whilst shareholder class actions are becoming more common these days, they usually focus on mistakes on the downside, such as Aristocrat not warning about profit downgrades promptly enough. Some people say there’s a reluctance to sue an icon like Qantas, but even Telstra copped a class action recently and they’ve just settled for $5 million.

Qantas would settle in a flash because they just couldn’t afford discovery which revealed all the information flows between management, the board and APA during the bid process. Then you’ve got the recent freight cartel conviction which triggered a $US61 million fine. The Qantas board really seem to have got away with limited press coverage or Australian regulatory scrutiny, although at least the aggreived Australian customers are firing up a class action for their losses.

Qantas is to be applauded for its operational success, especially the union-busting launch of Jetstar, but there remain serious governance and legal questions that should be pursued. The greatest Australian icon brand was almost bought on the cheap through a flawed process and with inadequate information flows, yet those responsible have not been properly held to account.

*Check out Peter Costello blasting Stephen Mayne at the Higgins poll declaration in today’s Mayne Report video and go here for all the action from Wednesday’s controversial Allco Finance Group EGM.