Airlines to pay compensation; In association with Chadwick Lawrence

Huddersfield Daily Examiner (Huddersfield, England), Feb 15, 2008

Byline: By HENRYK ZIENTEK Business Reporter

BRITISH Airways and Virgin Atlantic are set to pay out more than pounds 100min compensation to passengers for price-fixing, it was said today.

Newspaper reports said the settlement, which is believed to have been reached provisionally last night, will see BA pay pounds 71m - bringing its total payout relating to the scandal to pounds 338m.

The carrier was fined pounds 121.5m by the Office of Fair Trading last year and a further pounds 152m by the US Department of Justice after it was found guilty of conspiring to fix fuel surcharges.

Virgin is understood to be paying out pounds 30m in compensation in the class action settlement agreed in the US.

The carrier escaped financial punishment last year after coming forward to expose the collusion.

BA could be forced to set aside more cash on top of the pounds 350m provision made last year as the group also faces possible further regulatory fines and class action suits across Europe, it was said.

BA took the pounds 350m hit in last year's results when bottom-line pre-tax profits fell to pounds 611m from pounds 616m a year earlier.

The passenger lawsuit, which could be announced is thought to have been brought by a US law firmon behalf of passengers who lost out as a result of the price-fixing.

The carriers admitted colluding over fuel surcharges on long-haul flights between August, 2004, and January, 2006.

The charges, which came in response to rising oil prices, increased from pounds 5 to pounds 60 per ticket for a typical BA or Virgin long-haul return flight over that period.

BA declined to comment.