Air Europe's liquidators study dirty tricks file

(First Edition)

BRITISH AIRWAYS may face legal action from the liquidators of Air Europe, the airline founded by Harry Goodman that collapsed two years ago, writes Michael Harrison.

KPMG Peat Marwick confirmed last night that it is studying the BA-Virgin case to see if there are grounds for action on behalf of Air Europe's creditors. The liquidators and their lawyers are understood to be looking at a large dossier of complaints, including at least four affidavits, alleging BA was behind a dirty tricks campaign.

On Monday BA and its chairman, Lord King of Wartnaby, agreed in the High Court to pay Richard Branson and his airline pounds 610,000 libel damages and costs put at pounds 3m. They also offered Mr Branson an unreserved apology over a campaign that involved computer hacking, poaching of passengers, impersonation of staff and press smears. Pressure was mounting yesterday on BA from its big City shareholders over the Virgin Atlantic affair.

One of the company's biggest institutional shareholders said yesterday: 'There are boundaries of good and bad competition and BA appears to have overstepped the boundaries of good competition and fair competition. No one at senior level in BA has owned up and taken responsibility. It was obviously a pretty severe mistake. That is a worry.'

Some of BA's institutional shareholders are concerned that the Virgin dirty tricks episode may damage the airline's ambitions of expanding through tie-ups with airlines in other countries, particularly the United States, where BA is seeking a stake in USAir, America's fourth-biggest airline.

US aviation officials said, however, that the Virgin affair was unlikely to harm BA's chances.

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