Cloudy skies for British Airways

Stephen Beard May 18, 2007
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Cloudy skies for British Airways

Stephen Beard May 18, 2007
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TEXT OF STORYLISA NAPOLI: British Airways has set aside hundreds of millions of dollars to cover the cost of breaking competition laws. The company today reported a sharp decline in profits following a series of setbacks. From London, Steven Beard reports.


STEPHEN BEARD: Today BA revealed the financial cost of anticompetitive behavior: The airline has earmarked $700 million to pay potential fines and compensation claims.

The company broke the rules against collusion and price-fixing. It discussed a planned increase in its fuel surcharge with a rival airline. It’s widely believed that that airline was its bitterest competitor, Virgin. And that Virgin reported the offense.

BA’s Chief Executive Willie Walsh says he regrets the whole episode.

WILLIE WALSH: Despite the clear and very comprehensive policy that we have at British Airways there have been breaches of this policy in relation to our discussions about these surcharges with competitors.

Collusion hasn’t been BA’s only problem. Profits for the last year are down 13 percent for other reasons as well: a terrorist threat last August, a severe fog in December and a threatened strike by cabin crew led to the cancellation of thousands of flights.

In London, this is Stephen Beard for Marketplace.

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