DoJ competition

British Airways PLC
01 August 2007





DOJ COMPETITION INVESTIGATION RESOLVED



British Airways confirmed today (August 1) that it has entered into a plea
agreement with the United States Department of Justice (DoJ) on fines relating
to anti-competitive activity in the company's longhaul passenger and cargo
businesses.



Under the terms of the agreements, British Airways has agreed to pay a fine of
$300 million (£145 million) to the DoJ for infringements of competition laws,
which comprises $100 million for passenger fuel surcharges and $200 million for
cargo. The sum of the combined fine is consistent with British Airways' guidance
and provision of £350 million.



Earlier today the airline announced it had resolved an investigation by the UK
Office of Fair Trading (OFT) into longhaul passenger fuel surcharges.



The DoJ's investigation into longhaul passenger fuel surcharges was separate but
conducted in parallel with the OFT investigation.



British Airways chief executive Willie Walsh, said: 'Fuel surcharges are a
legitimate way of recovering costs and when set independently do not breach
competition law.  I want to reassure our passengers that they have not been
overcharged.



'However this does not in any way excuse the anti-competitive conduct.  This
behaviour is entirely unacceptable and we condemn it unreservedly.



'We have a long standing competition compliance policy which requires all staff
to comply with the law at all times.  I am satisfied that we have the right
controls in place.  However, it is deeply regrettable that some individuals
ignored our policy.'



This brings to an end the investigations by the DoJ and OFT into British
Airways.



The DoJ and the OFT continue with their criminal investigations into the conduct
of individuals.



                                      Ends



August 1, 2007                                                      080/KG/07



Note to editors:



The detailed analysis of the fines will be made public by the DOJ in due course.



Under US law criminal fines for Sherman Act infringements cannot exceed a sum,
which is the greater of:



  • $100 million
  • twice the pecuniary gain derived from the violation
  • twice the pecuniary loss suffered by consumers.





On passenger fuel surcharges the DoJ agreed that the fine should be capped at
$100 million.



On cargo, under US Sentencing Guidelines, which take 20 per cent of revenue as a
starting point adjusted after taking into account various factors including
British Airways' early and substantial co-operation, the fine was agreed of $200
million.



Under IAS 37, the airline made a provision of £350 million for settlement of the
competition investigations in its 2006/7 accounts.



      The provision in respect of competition investigations relates to
potential Government fines in the following jurisdictions in relation to cargo
fuel surcharges: USA, Europe, Australia, Canada, New Zealand and South Africa
and, in relation to long haul passenger fuel surcharges: USA and the UK. It also
relates to civil claims in the USA, Australia and Canada. Under IAS 37 the
provision represents the estimate of the amount to settle competition authority
and civil claims at the Balance Sheet date, but recognises that the final amount
required to pay all claims and fines is subject to uncertainty.








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