Cathay Pacific Airways pays A$11.7m fine to settle cargo price-fixing case

Australian court approves deal but carrier still has other suits pending over role in cargo cartel

PUBLISHED : Friday, 07 December, 2012, 1:34am
UPDATED : Friday, 07 December, 2012, 3:23am

Cathay Pacific Airways agreed to pay a fine of A$11.75 million (HK$95.5 million) in an air cargo price-fixing case in Australia.

The Federal Court of Australia approved the settlement between Cathay and the Australian Competition and Consumer Commission yesterday.

The carrier is also subject to proceedings in the United States, the European Union and South Korea for its role in a global air cargo cartel, which had kept fuel surcharges and other surcharges undifferentiated when the airlines moved cargo to and from those places in the past.

The case brought by the European Commission, the EU’s executive arm, remains unsettled. Cathay has appealed to the EU’s General Court against the EC’s decision to impose a €57 million (HK$577.5 million) fine.

“We are awaiting the decision from that court,” a Cathay spokesman said.

The EC fined 11 carriers including Cathay a total of €800 million in 2010.

The ACCC instituted proceedings against Cathay in April 2009, accusing it and 13 other airlines of fixing the fuel surcharge, security surcharge and rates on air cargo among themselves.

Ten airlines have reached settlements with the commission, including Emirates, which agreed to pay A$10 million to the commission last month.

Cathay’s settlement has brought the total penalties ordered in Australia to almost A$80 million.

The cases against Singapore Airlines, Air New Zealand and Thai Airways are due to be heard by the court.

Dealing with high fuel prices and weak passenger and cargo demand, Cathay filed a profit warning for this year on November 23.

Chief executive John Slosar said it would be a difficult year in light of falling passenger and cargo loads and rising costs. The airline’s fuel costs, in particular, were 6 per cent higher than a year earlier, while all other costs had increased, he said.

A week later, the carrier announced a 2 per cent pay rise across the board. Cathay’s cabin crew threatened industrial action if the management would not respond to their demand for a 5 per cent pay increase.

Shares in Cathay rose 1.5 per cent yesterday to close at HK$13.70.