BA Plunges on Cartel Allegation
theaustralian | Jun. 23, 2006
BRITISH Airways confirmed last night that British and US authorities were investigating the carrier for alleged cartel activity involving it and other airlines.
"The Office of Fair Trading and the US Department of Justice are investigating alleged cartel activity involving British Airways and other airlines in relation to pricing of passenger air transportation, including fuel surcharges," BA said.
In reaction, the company's share price plunged by almost 5 per cent to 349.5p in morning London trade.
The names of other companies in the suspected cartel were not revealed in the group's statement.
BA said that its policy was to conduct its business in full compliance with all anti-trust regulations. It was assisting the DOJ and the OFT with their investigations.
For the duration of the probe, BA commercial director Martin George and head of communications Iain Burns had been given leave of absence, the statement said.
A BA spokeswoman said the investigation was separate from a probe being conducted by the European Commission and the DOJ relating to alleged cartel activity in air cargo.
BA said in February that it had received a request for information from the European Commission and the DOJ as part of a different probe into a suspected cartel of airlines and air freight companies.
In Frankfurt, German flag carrier Lufthansa said it had no knowledge of such an investigation.
Paul Charles, director of communications at Virgin Atlantic, said: "We're aware of the investigations, and we're assisting with inquiries" from the two agencies. He declined to say whether Virgin Atlantic was being investigated.
High oil prices have forced most major carriers to levy a so-called fuel surcharge to cover the soaring cost of jet fuel, but low-cost airlines like Ireland's Ryanair and Britain's EasyJet have rejected such a move.