American Airlines has agreed to settle a class action alleging that a number of airlines arranged a price-fixing scheme, and has promised to provide information about the other implicated airlines.
The suit is one of several accusing a number of airlines -- including American Airlines, United Airlines, British Airways, Air France-KLM, and Lufthansa -- of conspiring to slap cargo shippers with fuel and security surcharges. The carriers are accused of using the September 11 attacks as an excuse to increase those surcharges, and one suit claims that Lufthansa took the reins in announcing new fees.
The settlement was filed in New York's Eastern District, but other suits are pending in a number of foreign jurisdictions, including Canada, Australia, and South Korea.
Denial of wrongdoing
American has agreed to pay $5 million to settle its part of the lawsuit, brought by freight shippers who say they were harmed by the alleged plot. The airline says it is not culpable, and that the settlement is purely in the interest of saving time and money.
"American Airlines has done nothing wrong," American spokesman Tim Wagner said in an email to Bloomberg. "Litigation is an expensive and uncertain proposition and avoiding the cost and inconvenience of trial made paying the settlement the best financial decision for American."
The airline has also agreed to cooperate in suits that are still ongoing, suggesting that it will turn over data inculpating the other accused carriers. Indeed, American has already promised to produce witnesses and documents to the plaintiffs.
Carriers settle up
According to the AP, American -- the first airline to offer its cooperation -- agreed to settle back in April 2009 and has been cooperating ever since. Air France-KLM, by contrast, paid $87 million to settle the case, but declined to cooperate. Lufthansa and Japan Airlines have also settled, paying out $85 million and $12 million, respectively.
The shippers are happy with the agreement, according to their lawyer, Michael Hausfeld.
"It is an important step forward for shippers in Europe and around the world and demonstrates that companies can act responsibly to resolve competition disputes without resorting to excessive or protracted litigation," Hausfeld said in a statement.
In court papers, Hausfeld suggested that his client would face a relatively steep hill at trial, writing that "while AA did face some risk of liability, it would be difficult for plaintiffs to obtain a judgment against it, given the evidence."
The alleged scheme also sparked an investigation by the Justice Department, which has so far led to a dozen guilty pleas and $1.6 billion in fines. British Airways and Korean Air were each fined $300 million; Air France coughed up $350 million. The European Union also probing the matter as well.