Settlement Reached in Laker Antitrust Suit
A settlement worth $64 million was reached Friday between Laker Airways, the now-defunct cut-rate transatlantic airline, and 12 defendants, including some of the world’s largest international air carriers, which it had accused of conspiring to push it into bankruptcy in 1982.
Settlement of the $1-billion federal antitrust suit removes a major obstacle to the public sale of stock in British Airways, one of the defendants. Prime Minister Margaret Thatcher’s government, intent on “privatizing” Britain’s major nationalized industries, hopes to raise more than $1 billion in the sale in Britain and on Wall Street and other foreign markets.
A spokesman for British Airways said the wish to proceed with the sale played a major role in Friday’s settlement in Washington.
“The desire by British Airways and the British government for privatization obviously intensified the efforts to reach a settlement,” David Burnside, a British Airways spokesman, said in a telephone interview from London. “It is the reason why British Airways led the way toward the settlement. It would be impossible to produce a prospectus for potential shareholders with this massive legal action outstanding.”
Small Creditors to Be Paid
According to an announcement by British Airways, an agreement has been reached with the liquidator for Laker that involves payments of $48 million to Laker’s creditors. About 16,000 small creditors--14,000 former ticket holders and 2,300 employees of the company--will be paid in full.
Creditors with claims of more than 50,000 pounds, or $69,000, will be paid 50,000 pounds plus 20% of the balance of their claims. Arrangements also have been made to make payments to the larger finance creditors, the majority of whom lent substantial sums to enable Laker to buy aircraft.
Sir Freddie Laker, the flamboyant founder and owner of the airline, would receive $8 million in return for “an acceptable release of all claims,” British Airways reported. It was not known if he had accepted the offer and he could not be reached for comment. Another $8 million was offered to Laker’s two law firms, Beckman & Kirstein and Metzger and Shadyac & Schwarz, but they have refused, the airline said.
Under the agreement, even if Sir Freddie does not accept the offer, the part dealing with the creditors will proceed. The agreement also provides for the purchase of 500,000 Laker shares owned by Laker’s wife, Joan, for 50,000 pounds.
Several Years of Litigation
The settlement ends several years of litigation brought against 10 airlines: British Airways, British Caledonian, Pan American, Trans World, SAS, Lufthansa, Swissair, KLM, Sabena and UTA, a French carrier. McDonnell Douglas and its financing subsidiary are the two other defendants. The amount that each defendant will pay was not revealed, but a source at one of the defendant airlines said the bill would be between $6 million and $8 million for each.
Laker and the airline’s liquidator, Christopher Morris of the accountants Touche Ross, alleged that the airlines had conspired among themselves and McDonnell Douglas to drive the carrier out of the North Atlantic, where it had about 20% of the market. They say the airlines threatened to withdraw their business from McDonnell unless the aircraft manufacturer stopped extending favorable credit terms to Laker. The defendants have denied the charges.
Still to be settled are three class-action suits brought on behalf of future transatlantic travelers. They allege that, with Laker out of business, the cost of tickets rose for everyone who may fly.
