Airline Chief Barred From Fare Talks : American’s President OKs Terms to Settle Justice Dept. Suit

American Airlines agreed to impose unusual restrictions on the conduct of its top executive under a settlement, announced Friday, of a 1983 Justice Department civil suit charging the carrier with trying to conspire with Braniff International to fix air fares.

Under a consent decree filed in U.S. District Court in Dallas, American’s chairman and president, Robert L. Crandall, will be barred for two years from discussing airline fares with officials of other airlines.

He also will be required under certain conditions for two years to consult with a company lawyer before communicating with officials of other airlines and to make notes of such conversations available to the Justice Department upon request.

The settlement, which also imposes restrictions on other American officials, will become final upon approval of the court.

American said in a brief statement that the settlement “involves no admission of liability” by it or Crandall. And one industry analyst said the restrictions were less harsh than those that the Justice Department originally sought and probably would not cause major hardships for the carrier.

‘Unusual’ Requirements

However, a Justice Department official called the consultation and note-taking requirements “unusual,” adding that he and others working on the case were not aware of the department ever imposing similar restrictions on executives of other firms.

The February, 1983, suit charged that Crandall, then American’s president and chief executive, had “unlawfully attempted to monopolize interstate trade and commerce” by proposing in a phone conversation to Howard Putnam, then president of Braniff, that the two Dallas-based carriers raise fares by 20%. Braniff and American, both with major hubs in Dallas-Fort Worth, were then locked in a bitter fare war that was draining revenues and profits.

Putnam rejected the offer, the suit said.

A federal judge in Dallas later dismissed the suit, but the Justice Deparment appealed and the case was reinstated by an appeals court.

The lawsuit originally sought an injunction prohibiting American for two years from employing Crandall in a top management position, but the department did not seek such a ban in the settlement announced Friday.

Terms ‘Sufficient’

Elliott Seiden, chief of the transportation section of Justice’s antitrust division, said the terms of the settlement “were sufficient” to guarantee that any price-fixing activities by Crandall or American “would not be repeated.”

The terms also ban American officials, excluding Crandall, from engaging for five years in any discussion of fares with any other airline except under certain circumstances, such as the setting of so-called joint fares, where two or more carriers set prices for flights in which they all are involved in flying a passenger to a destination.

Louis Marckesano, airline analyst with the Philadelphia brokerage of Janney Montgomery Scott, said the consultation and note-taking requirements may not be unduly burdensome but could be awkward because Crandall often attends industry seminars and other public events that many executives of rival carriers also attend.

However, the settlement excludes industry seminars and certain other occasions from the lawyer and note-taking requirements, the Justice Department’s Seiden said.

An American spokesman said Crandall would not comment on the settlement.