News: QAN UPDATE 1-Qantas CEO to step down early as airline's reputation under scrutiny

(Adds details of other reputational issues and share price fall in paragraphs 5-7, new CFO start date in paragraph 13)

Sept 5 (Reuters) - Qantas Airways (QAN) said on Tuesday that long-serving CEO Alan Joyce would exit the company two months earlier than previously flagged as a reputational turbulence engulfs Australia's flagship carrier.

Joyce's early retirement will see CEO Designate Vanessa Hudson, the first woman to lead the century-old airline, take charge on Wednesday.

The accelerated departure comes after Qantas on Monday apologised for its service standards falling short and acknowledged it was suffering reputational damage, less than two weeks after it reported record annual earnings underpinned by strong travel demand.

Australia's competition regulator last week sued it for allegedly selling tickets for more than 8,000 cancelled flights between May and July 2022 without disclosing they had been cancelled.

The airline had also faced scrutiny from politicians and the public over a decision to let nearly A$500 million ($323.00 million) of pandemic-era flight credits to expire by the end of the year, which it reversed shortly after the regulator filed its lawsuit.

Controversies involving Qantas, including the granting of a premium airport lounge membership to Prime Minister Anthony Albanese's son and its opposition to Qatar Airways adding additional flights to Australia have led to many recent newspaper headlines and editorials in the country.

The airline's share price had also taken a battering, falling 13% since the start of August amid questions over whether it had maximised profits at the expense of its longer-term reputation with customers.

"In the last few weeks, the focus on Qantas and events of the past make it clear to me that the company needs to move ahead with its renewal as a priority," said Joyce, who served as the airline's CEO for 15 years.

Chairman Richard Goyder said the executive transition came at a "challenging time" for the airline and its staff.

"We have an important job to do in restoring the public's confidence in the kind of company we are, and that’s what the board is focused on, and what the management under Vanessa's leadership will do," Goyder said in a statement.

Qantas had announced a raft of leadership changes in June in a bid to increase focus on key areas as the airline completes its post-pandemic recovery.

The airline said newly appointed Chief Financial Officer Rob Marcolina will also start early alongside Hudson. ($1 = 1.5480 Australian dollars)