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Three former British Airways executives have been named in a lawsuit seeking damages from the airline after it admitted fixing ticket prices.
Two Virgin Atlantic executives are also named in a class-action suit filed by Cohen, Milstein, Hausfeld & Toll, a Washington law firm.
The former BA executives are Martin George, who was commercial director, Ian Burns, who was communications director, and Alan Burnett, formerly head of UK and international sales.
The lawsuit also names Paul Moores, former communications director of Virgin Atlantic, and Willy Bolter, its current commercial director.
Michael Hausfeld, the lawyer bringing the case, is seeking damages from both airlines for conspiring to fix the price of fuel surcharges. He has said that if the airlines do not cooperate, he may seek compensation from the individuals. None of those named could be contacted last night and the airlines declined to comment.
BA yesterday pleaded guilty in a US court to price fixing as part of a $300 million (£149 million) settlement with the US Department of Justice (DoJ). Judge John Bates, of the US District Court in Washington, accepted BA’s guilty plea and confirmed the fine. He said that the case “involved considerable commerce and reflected long-term and widespread conduct involving major airlines and players”.
By cooperating with American officials BA has escaped a more severe fine, which the court was told could have reached $900 million.
The charges brought against BA by the DoJ stem from two parallel investigations into price-fixing. The first relates to a conspiracy by BA and Virgin Atlantic to fix fuel surcharges on passenger tickets. Between 2004 and early 2006 the two carriers discussed the timing and size of surcharge increases, which were introduced to help to cover rising fuel costs.
Virgin’s lawyers blew the whistle on this practice when it was uncovered and the company and its executives have received immunity from UK and US legal authorities.
The Office of Fair Trading (OFT) fined BA £121.5 million three weeks ago for breaching UK competition law, and $100 million of the DoJ fine relates to this conspiracy.
Mr George and Mr Burns were suspended last June after a raid by the OFT on BA’s offices and they left the company in October. Mr Burnett retired in March 2006.
The remaining $200 million of the DoJ fine is a penalty for BA’s attempts to fix the surcharges applied to cargo. This is part of a much larger investigation, covering about a dozen airlines. BA still faces a continuing investigation into its cargo activities.
The DoJ is expected to name up to ten BA executives involved in both situations and it may take criminal action against them.
The class-action lawsuit against BA and Virgin has been filed in San Francisco and a similar suit may be brought in London.
Mr Hausfeld said that Virgin was working hard to reach an out-of-court settlement, but that BA was fighting the suit. “Virgin is being far easier to deal with, but we are expecting trouble from BA,” he said.
Earlier this year BA put aside £350 million to cover criminal penalties and civil settlements stemming from price-fixing activities. This is more than half of last year’s £602 million operating profits.
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