British Airways has admitted breaking competition rules and has set aside £350 million to pay for possible consequences.
The carrier is under investigation by the OFT, the European commission and the US department for justice over alleged price fixing of fuel surcharges for both long-haul and cargo flights.
BA and Virgin Atlantic introduced fuel surcharges in May 2004 when oil cost approximately £20.25 per barrel.
The levy was introduced at £5 per return flight, but BA now charges £66 for long-haul return flights of less than nine hours. Oil currently costs around £35 per barrel.
BA has pre-empted the findings of the investigation by admitting that employees had broken internal anti-competition guidelines and made a provision of £350 million for fines and legal claims.
BA admitted last year that “innaproprite conversations” about surcharges may have taken place with other airlines.
Chief executive Willie Walsh said: “The policies which we have in place at BA, which are designed to ensure we don’t breach competition law, have been broken. That is deeply regrettable.”
According to EU law, a company can be fined as much as ten percent of annual turnover for anti-competitive behaviour, which could leave BA with a bill of over £850 million.
Legal experts say such a large fine is unlikely, and Walsh said £350 million was an “accurate” estimate of the fines and legal claims.
This provision represents more than half of the airline’s annual pre-tax profits, which were announced as £611 million on Friday.
May 21 2007