British Airways this morning admitted breaking price-fixing laws and set aside £350m to pay potential fines arising from investigations.
The figure - more than half the year's profit - accompanied a fall in the airline's profits for the year to the end of March.
BA, headed by former Aer Lingus chief Willie Walsh, is being investigated by the UK and the US for alleged price fixing on fuel surcharges, after British investigators were tipped off by rival Virgin Atlantic. Two BA officials resigned last year after the investigations began.
In the results statement, BA admitted staff had broken competition laws over fuel surcharges - hikes to airline ticket prices imposed to pass on rising fuel costs.
'BA has a long-standing, clear and comprehensive competition compliance policy,' its statement said. 'This policy requires all staff to comply with the law at all times. It has become apparent that there have been breaches of this policy in relation to discussions about these surcharges with competitors.'
BA reported a sharp drop in profits in the three months to the end of March - £27m compared with £98m a year earlier. For its full financial year, pre-tax profits were almost 1% lower at £611m, hit by increased security measures, fog and cabin crew disputes.
Passenger numbers rose 2% to just over 33 million for the year, but dropped 2.7% to 7.3 million in the three months to the end of March compared with a year earlier.
Load factor - the percentage of seats filled - was little changed over the year at 70.4%, though it dropped to 67.2% in the latest quarter.
BA's fuel costs rose by 22% over the year, but the airline said costs excluding fuel were up only 0.4%.
BA left its estimate of revenue growth for the current year unchanged at 5% to 6%, but said it saw 'some weakness' on North Atlantic routes.
It also announced an order for eight Airbus A320 planes for its short-haul fleet.
BA said it had not made a final decision on its 10% stake in Iberia, but ruled out making any further investment as part of a consortium and also ruled out an independent bid for the Spanish airline.
Chief executive Willie Walsh described the year as 'frustrating' for its customers, because of disruption and 'overly restrictive' security measures in Britain.
BA shares closed down 14 pence at 488p in London this evening.
