KAL settles price-fixing class action suit for $65M

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KAL settles price-fixing class action suit for $65M

It has been belatedly revealed that Korean Air Lines, the nation’s top carrier, agreed to pay $65 million last month to settle a class action suit in the United States after the company was accused of price fixing on flights between the U.S. and Korea.

According to KAL, the company will pay $39 million in cash and $26 million in travel vouchers to a group of U.S. passengers who claimed the air carrier conspired with its smaller rival Asiana Airlines to fix fares and fuel surcharges.

People who purchased tickets in the U.S. between Jan. 1, 2000 and Aug. 1, 2007, for flights between the U.S. and Korea, are eligible to receive compensation according to information posted on a Web site describing the settlement.

To receive compensation, a passenger must submit a claim by the end of the year, either online at koreanairpassengercases.com or by mail. They must provide a record of their purchases.

A U.S. court hearing is scheduled on Dec. 2 to approve the settlement.

“We want the lawsuit to be wrapped up smoothly with the plaintiffs,” an official from KAL said.

In 2011, Asiana, the nation’s second top flag carrier, settled the case by paying $21 million in cash and travel coupons.

The class action suit was filed after the two airlines were found guilty by the U.S. Department of Justice of the criminal antitrust violation of fixing prices. KAL was fined $300 million after pleading guilty, while Asiana agreed to pay a $50 million fine.

Industry insiders say the costly settlement will dent a struggling KAL. According to KAL, some of the payments have already been accounted for on its balance sheet and the rest will show up this or next quarter.

KAL, which is part of Hanjin Group, reported this week that its net loss worsened in the second quarter. The company said in a regulatory filing on Wednesday that its net loss was 358.7 billion won ($322 million) in the April to June period, from a 164.6 billion won loss a year earlier.

The carrier blamed foreign exchange losses for the decline.

In addition, the airline posted an operating loss of 50.8 billion won in the second quarter, compared to an operating profit of 94.4 billion won a year earlier. The company had operating losses for a third straight quarter.

Sales also dropped 9.8 percent on-year to 2.83 trillion won. KAL said the weak yen and tension between the two Koreas suppressed travel demand from overseas. The airline’s passenger volume in the second quarter dropped 6 percent compared to a year earlier. Cargo volume also dropped 2.1 percent on-year, according to the air carrier.

BY JOO KYUNG-DON [kjoo@joongang.co.kr]

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