Major European airlines intervened during the winter of 1982 to oppose efforts to save Sir Freddie Laker's cut-rate, no-frills transatlantic Skytrain from bankruptcy, according to papers filed in U.S. District Court here as part of a Laker billion-dollar antitrust suit.
The airlines threatened economic reprisals against McDonnell Douglas Corp. and General Electric Co. if the makers of airplanes and engines that were sold on credit to Laker Airways persisted in a rescue plan to supply the cash-strapped airline with $9.4 million in exchange for stock in the company, European airlines acknowledged in sworn affidavits.
But the airlines said that their actions, which were detailed in telex messages they sent to each other, were not responsible for Laker's eventual collapse on Feb. 5, 1982. Nor were their actions part of a coordinated conspiracy to drive Laker's low-cost operation out of business so they could increase passenger fares on the lucrative transatlantic run, the airlines said.
Instead, the airlines said they acted individually to preserve the traditional distinction between air carriers and the aircraft makers.
In his billion-dollar antitrust suit filed late last year, Laker accused McDonnell Douglas and eight European and American airlines that fly the transatlantic route of engaging in "a predatory scheme" to drive the cut-rate carrier out of business by slashing their fares to below-cost levels.
When Laker started operation in 1977, he created a sensation with his Skytrain, which charged $115 for the New York-London run, less than half of the $313 fare set by the other scheduled airlines. As a result, he soon expanded to more than 40 flights a week from Britain to different U.S. cities and captured one in seven transatlantic passengers with his low-cost, no-frills service. He also forced the established airlines to match his price while offering full services and, Laker claimed in his suit, lured passengers from other European cities to London to take advantage of the low-cost transatlantic fares from there.
U.S. District Judge Harold H. Greene said the Laker complaint "alleges a classic antitrust conspiracy" involving McDonnell Douglas, Pan American World Airways, Trans World Airlines, British Airways, British Caledonian Airways, Swissair, Lufthansa, Sabena and KLM.
BA, British Caledonian, Lufthansa and Swissair countered with a suit in the High Court of Justice in London challenging Laker's right to sue in an American court. They lost the first round of that suit but are appealing and are threatening to take it as high as the House of Lords, the supreme court of Great Britain.
In Washington, meanwhile, Judge Greene strongly asserted American sovereignty over the case in a decision blocking other airlines from moving to the British courts, which take a more permissive view of antitrust violations than American law allows.
With the high cost of trying a complicated case in the United States, lawyers told the British court that each airline's legal fees could amount to $1 million.
Besides the transatlantic battle between the United States and British courts, the Laker suit has spawned a U.S. Department of Justice grand jury probe of possible criminal violations of American antitrust laws by airlines flying the North Atlantic route.
That investigation has drawn official protests from Great Britain, which fears that the antitrust actions could throw a monkey wrench in plans to sell British Airways to private investors. To enforce its view, the Thatcher government ordered BA and privately owned British Caledonian not to supply information in Britain for either the American court case or the grand jury investigation and stalled granting permission to another no-frills, low-cost airline, the American-owned Peoples' Express, to fly the North Atlantic route.
So far, action in the Laker suit here has centered on procedural issues, and most of the documentation in the 10 volumes of arguments filed in the case to date originated from the British action.
In a series of affidavits filed with the British court, Lufthansa and Swissair officials swore they and other European airlines received telex messages on Jan. 28, 1982, from the Union de Transports Aeriens (UTA), a French airline, suggesting that other air carriers express their opposition to the role of McDonnell Douglas and GE in the Laker rescue effort.
As a result of that telex and general press reports, affidavits showed that Lufthansa Director Reinhardt Abraham told top McDonnell Douglas and GE officials that Lufthansa "would demand assurances that it would receive similar risk-sharing provisions from McDonnell Douglas and GE when making future purchases" if the companies went ahead with their rescue plan.
Furthermore, Abraham threatened refusal to help McDonnell Douglas design a new plane in which the aircraft manufacturer "was trying to interest Lufthansa," Prof. Alfred Rudolf, Lufthansa's general counsel, continued in a sworn statement to the British court.
Swissair officials also objected that the McDonnell Douglas role in the Laker rescue was "contrary to good business relations."
Besides Lufthansa and Swissair, the affidavits named British Caledonian, Alitalia, KLM and Sabena as airlines that sent telexes objecting to McDonnell Douglas' taking stock in exchange for helping to keep Laker alive.
Affidavits filed in the case so far do not deal with a major thrust of the Laker charge--that the airlines conspired to lower their fares in an effort to drive Laker out of business so they could maintain North Atlantic fares at an artificially high level. Nor have affidavits been filed concerning Pan Am and TWA, the U.S. airlines that are defendents. They have been fighting Laker over documents and information to which the defunct airline is demanding access.