Ten present or former British Airways executives, including the carrier’s current director of operations, have been identified in US legal documents as at risk of prosecution over collusion with rival airlines about the level of fuel surcharges.
The 10 are excluded from a deal between BA and US prosecutors giving the airline immunity from criminal prosecution in return for its admission of guilt and co-operation with the Department of Justice inquiry. Four of the 10 are still working for the carrier.
Their names were released on Friday in relation to two investigations – one into collusion with Virgin Atlantic on the level of passenger fuel surcharges and the other into fixing surcharges on cargo with a number of airlines.
Earlier, a US District Court approved the plea agreement between BA and the US DoJ, announced on August 1, with the carrier accepting a total fine of $300 million for infringing competition law.
The judge described the collusion as “widespread and of long duration”, but said BA’s co-operation – including the provision of thousands of documents – had lessened the punishment.
The fine comprised $200 million for colluding on cargo surcharges and $100 million for the surcharges on passengers.
However, the fines could have been up to $900 million under US competition law. In a statement, BA noted: “The court agreed the substantial co-operation provided by BA justified a significant reduction in fines.”
Given the additional £121.5 million fine imposed by the UK Office of Fair Trading, BA chief executive Willie Walsh can be pleased that the total fines remain within the £350 million set aside in the last financial year for settling the affair.
Walsh has insisted only “a limited number” of staff were involved and two executives, commercial director Martin George and head of communications Iain Burns, resigned last year following BA’s admission of collusion. As expected, they are among the 10.
George conceded at the time that “inappropriate conversations” may have taken place between his department and other airlines, and BA identified Burns as having called Virgin Atlantic to discuss surcharges.
The four still working for the airline comprise director of operations Gareth Kirkwood, business development manager Ian Barrigan, head of UK and Ireland sales Andrew Crowley and international customer relations manager Anthony Nothman.
The others include former head of UK and Ireland sales Alan Burnett, who retired in March 2006, and three former cargo sales executives.
Separately, five individuals were named in a US class-action lawsuit, filed last week by a Washington law firm seeking compensation for the surcharges on fares.
It named George, Burns, Burnett and, in a fresh development, two staff at Virgin Atlantic – former communications director Paul Moore and commercial director Willy Boulter. Virgin Atlantic declined to comment.
The involvement of executives at either airline is clearly potentially damaging, not least in terms of customer perception, although it is too early to judge the impact.
At least one US lawyer has said a suit will be brought in the UK , and the UK Consumer Association may launch a suit of its own.
The DoJ’s naming of so many current and former executives – although in no way implying guilt – may strengthen the class-action cases. The implications for the individuals are even more serious, leaving them open to possible extradition to the US to stand trial and with conviction on the most serious charges likely to result in jail terms.
Becket McGrath, an expert in competition law at Berwin Leighton Paisner, believes the class-action suits on behalf of corporate cargo customers may cause BA the biggest problems, arguing: “They are the most risky because of the major customers involved.”
He said: “Claimants won’t have to prove there has been an infringement because BA has admitted it.”
Both BA and Virgin Atlantic are now immune to criminal prosecution – BA because of its admission of guilt and Virgin because it blew the whistle on the collusion.
Analysts remain cautious about reading too much into the legal fall-out, but suggest the outlook for BA is far from rosy. One senior analyst told Travel Weekly: “We have been aware people working for the airline might be named, but it is different to see the names in print.
“This is clearly going to run for a long time and it is not helping BA. However, we have not seen an impact on the share price so far.”
Referring to the class-action lawsuits, he said: “BA will recognise it faces open season. But the more pressing issue is whether BA can complete its move to Heathrow’s Terminal 5 on time, and that is not certain.”