Chris Bell, the chief executive of Ladbrokes, has this afternoon reversed a decision to ban his 14,000 staff from flying with British Airways on business after the airline tried to force his teenage daughter and her friend off a flight back from Barbados.

The private dispute, which had ratcheted up into a corporate row, and could have cost BA up to £2 million, was resolved after Willie Walsh, the BA chief executive issued a personal apology to Mr Bell on behalf of the airline.

Mr Bell, a frequent BA traveller, was returning back from the Caribbean island on April 8 with his 14-year-old daughter and a friend. The flight was full and the girls were initially told they would be bumped off.

That incensed Mr Bell, who did not believe he could leave the girls on the island. BA said that "once it became apparent that all three were part of one party, they were all placed on the flight", although the episode prompted the Ladbrokes boss to write to BA and complain.

Following an exchange of correspondence, BA said that Mr Walsh wrote last week and offered the two girls £250 each in compensation, although this was not enough to persuade Mr Bell to relent and start booking with BA again.

A spokesman for Ladbrokes said this morning: "There's no ban as such. We've said to the travel company we use that we have a few issues with BA, and asked them to prioritise other airlines until those issues are resolved, though they can still use BA if there's no alternative."

He said that the way Mr Bell had been dealt with was only one of a number of issues the bookmaker had with the airline. "A few people got caught up in T5, which was part of it. We also have issues with their complaints procedures."

In a subsequent statement this afternoon, the bookmaker said: "Ladbrokes is satisfied that its recent complaints to BA are now being adequately addressed. These related to a number of incidents and the complaints handling procedure itself. Ladbrokes will now recommence its normal travel policy."

A spokesman for BA said: "Mr Bell is a valued customer".

Last year, The Times exposed plans by BA to offer senior directors a lavish travel policy that guaranteed them unlimited free first-class flights, as the company was locked in strike talks with unions over plans to alter their pay and conditions.

Senior managers were asked to rubber-stamp a new policy allowing non-executives to “queue-jump” paying passengers and reserve free, first-class tickets to any destination in the world, just as the airline was preparing to cancel 1,300 flights because of a potentially crippling strike by thousands of cabin crew.

The strike was eventually averted by a last-minute deal with the Transport & General Workers’ Union.

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