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BA to fight back after £4.5m fine

By
Emily Williamson

BRITISH
Airways could take its battle against a £4.8 million court fine for abusing its
dominant market position to the European Court.

It
comes as the carrier dismisses reports of plans to axe 5,000 jobs as “pure
speculation”.

BA
was forced to tear up its contracts with agents in 1999 after the European
Commission ruled the deals were illegal. The EC said BA’s moves to offer travel
agents extra commission payments in return for them meeting or exceeding their
previous year’s sales of BA tickets, amounted to a “loyalty
discount”.

It
said this would discourage the agent from selling tickets for other airlines to
customers. The complaint against the practice originated from Virgin Atlantic.

BA
appealed, but the Court of the First Instance has upheld the decision and the
fine.

BA
paid the fine and changed its incentive arrangements at the time.

A
spokeswoman said: “We will study the judgement and consider over the next
few weeks whether to appeal to the European Court.”

Virgin
Atlantic said the fine “completely vindicates our position”, claiming this will
set a legal precedent.

Meanwhile,
a letter from BA chief executive Rod Eddington to staff which said the 2004
business plan will be published early in the New Year rather than the usual
time of March has sparked job loss fears.

The
letter said: “We need to make a much bigger profit if we are to pay our
debts, pay ourselves and pay shareholders a dividend, while improving our
products and services. We must clearly do something to improve our
position.”

Eddington
added: “It will be a plan that inevitably will be looking to do things
differently and more efficiently.”

A
spokeswoman said Eddington “had not ruled anything in or out”,
however an industry source hinted the news of possible job losses had come out
as pay reviews loom.

 

 

 

 

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