BA chairman upbeat over OFT inquiry

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The British Airways chairman Martin Broughton said yesterday he was hopeful of a speedy conclusion to the investigation into alleged price-fixing by the airline.

Mr Broughton also pledged that if the initial inquiry by the Office of Fair Trading and US Justice Department gave BA a clean bill of health, then the two executives placed on leave of absence over the affair would return immediately.

Martin George, BA's commercial director, and Iain Burns, its head of communications, were sent home last month after the OFT raided BA's offices as part of an investigation into an alleged cartel to fix fuel surcharges on long-haul journeys. The inquiry was prompted by a tip-off to the OFT from Virgin Atlantic.

Mr Broughton told BA shareholders at yesterday's annual meeting that the OFT had taken away a wide range of documents. It is also understood the airline's chief executive Willie Walsh has been interviewed.

The BA chairman also announced the trustees of the airline's pension fund had agreed a cut in future benefits was needed to tackle the £2bn deficit in the scheme and were writing to members to that effect.

BA has offered to make a one-off £500m contribution to the scheme in return for an increase in the retirement age for pilots and cabin crew and a reduced rate of pension accrual.

Shareholders took BA board to task for refusing to reinstate the dividend, even though the airline had made a £705m operating profit last year. One small investor accused BA of "starving" shareholders of dividends and another accused it of "greed".

Mr Broughton defended the decision not to return to the dividend list, saying BA had talked it through with its big institutional investors and agreed it would have to wait until the airline achieved a 10 per cent operating margin. Last year it reached 8.3 per cent.

Mr Walsh said BA needed to do more to reduce its costs and announced it had just reached an agreement with unions at Gatwick to merge long-haul and short-haul cabin crews - a move that will save £13m a year.

Mr Walsh said there was now an urgent need for a third runway at Heathrow allied to better use of its existing two runways, and attacked environmentalists who believed global warming could be solved by "beating up on aviation".

But he was upbraided by one of his own captains, Doug Maughan, who described the idea of "environmentally responsible aviation" as an oxymoron and said a carbon tax was the answer to curbing pollution from air travel and not the emissions trading scheme that BA backs.