UK authorities have raided British Airways Plc as part of a transatlantic investigation into an alleged cartel over airfares and fuel surcharges which saw BA suspend two senior executives.
American Airlines, United Airlines and Richard Branson’s Virgin Atlantic said they were also involved in the probe, which is being conducted jointly with U.S. authorities, but were not direct targets.
Those four airlines are the only carriers allowed to fly direct between London’s Heathrow Airport and the United States under bilateral treaties.
BA shares, which had been trading at five-year highs, fell around 6 percent.
BA, Europe’s third-largest carrier, said the investigation by Britain’s Office of Fair Trading (OFT) and the U.S. Department of Justice related to passenger ticket prices, including fuel surcharges.
All parties declined to comment on whether the investigation was limited to transatlantic airfares or had a wider remit.
The carrier said its Commercial Director Martin George and Head of Communications Iain Burns had been given leaves of absence during the investigation.
“We would be very surprised if a specific issue relating to BA’s pricing has developed. Unfortunately, though, putting key personnel on leave is a difficult signal for the market to interpret,” Deutsche Bank analysts said in a note.
Analysts said the maximum BA could be fined if found guilty was 10 percent of turnover on the routes involved. UBS said this would amount to a maximum 315 million-pound ($580 million) fine for BA’s transatlantic revenues in the last financial year.
“The worst case scenario is that BA is forced to open up Heathrow to additional transatlantic carriers, without having access to the benefits of an EU/US Open Skies agreement,” Exane BNP Paribas analysts said in a note.
The United States and Europe have been in talks aimed at eliminating restrictions on service and routes between the two continents under a so-called open skies deal.
The OFT said it visited BA’s offices on June 13 as part of a a civil and criminal investigation into alleged price coordination and its probe was “at an early stage.”
Later in the day the U.S. Justice Department confirmed it was investigating possible anticompetitive practices in airline passenger fares and cargo shipments.
“The antitrust division is investigating the possibility of anticompetitive practices involving surcharges and rates for passenger fares and air cargo shipments,” the department said in a statement.
The Justice Department statement did not identify which airlines were under investigation and Justice Department officials declined to comment.
Other major U.S. and European carriers said they were not involved. A spokesman for the Oneworld Alliance, of which BA is a member, said the alliance was not the target of the investigation.
BA first introduced a fuel levy in May 2004 which it last raised in April this year after crude oil prices nosed above $70 a barrel. Virgin Atlantic also introduced a fuel surcharge at around the same time.
The investigation follows a price-fixing probe involving airlines’ cargo charges announced in February which spread to carriers in the United States, Europe and Asia. That investigation is still proceeding.
That probe centered on surcharges that airlines have imposed for fuel, added security since the Sept. 11, 2001 hijackings in the United States, and higher war risk insurance, carriers being questioned said.
BA said in a statement its policy was “to conduct its business in full compliance with all applicable competition laws” but declined to comment further.