Branson seeks 40m pounds damages for dirty tricks

RICHARD BRANSON is understood to be demanding about pounds 40m in compensation from British Airways for the commercial damage done to Virgin Atlantic by the dirty tricks campaign.

The figure emerged last night as talks between the two airlines came to a halt following Virgin's dismissal of BA's initial offer as inadequate.

The sum being demanded by Virgin is based on the dollars 75m to dollars 100m it believes it could win in the United States if it took anti- trust action against BA.

Mr Branson wants compensation both for the passengers poached from Virgin by BA and the damage he claims was done to Virgin's reputation and its finances by the smear campaign.

He claims that this prevented Virgin from raising money at one stage by selling off a stake in the airline to overseas investors.

Talks are expected to resume in the next 48 hours between Robert Ayling, BA's newly-appointed managing director, and Trevor Abbott, a senior Virgin executive who runs two of the group's holding companies, Voyager Investments and Virgin Retail.

'They will be starting with a clean sheet,' a Virgin spokesman said. 'We intend to have one more stab at it because the alternative is a long and hard road ahead for both of us in the courts.'

Late last week BA offered Virgin a deal under which it would pay pounds 3m in compensation for a maintenance delay by its engineers which grounded a Virgin Boeing 747 for several weeks; pay for an arbitrator to rule on damages for the passenger-poaching; and help Virgin to obtain slots at Heathrow to launch new long- haul services.

Yesterday Sir Michael Bishop, chairman of British Midland, joined the fray, warning that it would demand government intervention to block any 'back door, back of envelope' deal on slots between BA and Virgin.

'What BA cannot do is change the slot allocation system unilaterally or suggest it has undue influence over the Civil Aviation Authority or the Heathrow scheduling committee,' Sir Michael said.

Virgin said the issue of compensation for the engineering delay was a separate matter and, in any event, its claim was for pounds 6m not pounds 3m. The matter of slots had been discussed with BA but it was not a central feature of Virgin's compensation claim, it insisted.

Under the slot allocation rules, BA is entitled to hand over slots it uses for intercontinental services to another carrier, which would then also use them for an intercontinental service. BA cannot give Virgin any slots used on European services but must put them back in the pool for reallocation to all new entrants at Heathrow.

British Midland announced that it is introducing separate business class cabins next month on all its European services. Prices will be the same as the existing Diamond class service.