British Airways agreed to settle the case by apologizing to Mr. Branson and paying him and his company $945,000 in damages. It also agreed to pay all court costs stemming from a suit brought by Mr. Branson, estimated at $3 million.
In agreeing to settle a libel case brought by Mr. Branson, one of Britain's wealthiest and best-known entrepreneurs, British Airways said an internal investigation had found "incidents involving our employees which we accept were regrettable and which gave Richard Branson and Virgin Atlantic reasonable grounds for concern."
The case arose from assertions by Mr. Branson that British Airways had conducted a smear campaign against him and his business and had used unethical measures to win Virgin's customers and monitor the airline's activities.
British Airways accused Mr. Branson of fabricating the charges, prompting Mr. Branson's libel suit.
Although Mr. Branson never directly accused the management of British Airways of running the "dirty tricks" campaign, the battle clearly pitted him against Lord King, the British Airways chairman. Under Mr. King, British Airways initially dismissed Mr. Branson's charges as "wholly without foundation."
In a statement issued after the court hearing, British Airways said its directors "had not been party to any concerted campaign against Richard Branson or Virgin Atlantic."
British Airways would not specify what improper actions its employees had taken against Mr. Branson and Virgin, or to name the employees.
But Virgin, in a statement issued after the hearing, outlined its allegations against British Airways. The allegations of illegal or unethical actions, all of which have been reported by British newspapers over the last year, include:
* Efforts by British Airways to obtain confidential computer information about Virgin Atlantic flights.
* The solicitation by British Airways representatives of Virgin Atlantic passengers inside of airports and at their homes.
* Attempts by British Airways representatives to impersonate Virgin employees.
* The shredding by British Airways employees of documents related to the case.
* Efforts by British Airways to circulate to the news media misleading reports about Virgin.
* Efforts by a British Airways consultant to plant hostile or negative stories in the news media.
Mr. Branson called the settlement "a complete and total vindication" for himself and his 9-year-old airline, which competes against British Airways on key routes between London and the United States and Asia.
"Although Virgin Atlantic is a small independent airline, our competitive threat obviously proved too much for certain people at British Airways," Mr. Branson said.
"Despite their overwhelming dominance of the British aviation industry, they could not match the quality of our product. As a result, they appear to have felt the need to resort to unfair . . . competitive practices."