UPDATE 2-BA, Virgin settle U.S. fuel surcharge claims

(Recasts; adds Virgin Atlantic statement, background, bylines)

By Mike Elliott and Martha Graybow

LONDON/NEW YORK, Feb 15 (Reuters) - British Airways (BAY.L: Quote, Profile, Research) and Virgin Atlantic [VA.UL] will together pay about $203 million to settle a lawsuit brought by passengers who said the airlines illegally fixed the price of fuel surcharges on long-haul trips.

The agreement announced on Friday settles a two-year-old case pending in U.S. District Court in the Northern District of California contending that customers overpaid for fuel surcharges, which were meant to help airlines cope with the rising cost of jet fuel.

Under the pact, U.S. ticket purchasers will receive $59 million, while British purchasers will get 73.5 million pounds ($144.4 million) in refunds, according to lawyers representing the plaintiffs.

The agreement, which still requires court approval, covers 8 million passengers in the US and Britain who bought tickets from either BA or Virgin between Aug. 11, 2004, and March 23, 2006. The airlines will pay one-third of the fuel surcharge the passengers paid per ticket.

"As we have previously said, we absolutely condemn any anti-competitive activity by anybody," BA Chief Executive Willie Walsh said in a statement.

"This settlement, which British Airways and Virgin Atlantic have jointly agreed with the lawyers for the plaintiffs, is fair and reasonable," he said.

Virgin said it "deeply regrets its involvement in this matter and believes the provisional settlement reached now draws a line under this episode."