British Airways (BA) Friday announced annual pre-tax profits of £616 million ($1.2 billion) after setting aside a staggering £350 million for potential fines in connection with findings that the airline broke competition law over fuel surcharges.
The anticipated costs relate to findings last summer that British Airways had been discussing the issue of fuel charges with its competitors. Britain's Office of Fair Trading and the US Department of Justice are still investigating the case, and criminal action could follow. Annual pre-tax profits up to March 31, 2007, were down 0.8% compared with last year's result of £616 million, BA said. Operating profits slumped 13% to £602 million after a spate of negative events, including a threatened strike, terrorism threats and weather-related problems, BA said. The £350 million set aside, which is more than half of the pre-tax profit recorded, are to cover fines as well as any liability resulting from legal action over the rigging of fuel surcharge prices. “Members of our staff breached our comprehensive policies on competition compliance rules,” CEO Willie Walsh said Friday. “I find that very regrettable and completely unacceptable,” he added. Walsh said the results were “strong” in what had been “a challenging year”, which saw sales up 3.4% to £8.49 billion. ($16.4 billion) (monstersandcritics.com)