LONDON, Aug 1 (Reuters) - British Airways revealed the biggest fine in its history on Wednesday as it reached settlements with the U.S. and UK authorities for price fixing that could cost it up to 350 million pounds ($711 million).

Europe's third-largest airline said it had agreed to pay a fine of 121.5 million pounds in the UK and expected U.S. authorities to announce a separate fine later in the day.

Archrival Virgin Atlantic Airways blew the whistle on BA after individuals at the two carriers discussed proposed changes to fuel surcharges for long flights.

Virgin won immunity by taking the matter to the UK's Office of Fair Trading (OFT).

"This resolves the OFT's and the DoJ's (U.S. Department of Justice) investigation of British Airways," BA said in a statement to the London Stock Exchange.

The fine, the biggest imposed on BA for any regulatory breach anywhere, would have been higher if the airline had not admitted wrongdoing.

"Had BA not made admissions and cooperated from the outset, they would have been fined many millions of pounds more ... tens of millions of pounds," said OFT director of cartel operations Simon Williams in a telephone interview with Reuters.

"This is the largest civil fine ever imposed by the OFT," he said, adding that he hoped it would serve as a deterrent and encourage businesses to come forth with information before their rivals do. "Businesses up and down Britain have to ask themselves some very hard questions."

Two senior BA executives quit last October after being linked to the investigation and in May BA set aside 350 million pounds as a provision for possible fines.

BA said it expected that provision to cover the fines and any impact from a separate, widespread probe of the airline industry regarding cargo fuel surcharges which also involve authorities in Europe, Canada, Australia, South Africa and New Zealand.

Analysts said the UK fine was in line with expectations given the provision already taken and noted BA could have fared far worse.

"The fine is less than the maximum 10 percent of revenue (850 million pounds) that could have been imposed," said Citigroup analyst Andrew Light in a research note which carried a 580 pence target price for BA and a "Buy/High Risk" investment rating.

"This news is already fully priced in," he said.

The price fixing related to surcharge increases which took place from 2004 until 2006.

Fuel surcharges soared from five pounds to 60 pounds per ticket on typical BA or Virgin long return flights during the period but BA Chief Executive Willie Walsh defended these rises, which came as crude oil prices surged.

"I want to reassure our passengers that they were not overcharged," he said.

BA said both the OFT and the U.S. Department of Justice would continue with criminal investigations into the conduct of individuals involved.

Shares in BA were down 3 percent at 385.5 pence by 0942 GMT versus the FTSE 100 index which was down 2.3 percent.

Key facts about BA price-fixing probe

LONDON, Aug 1 (Reuters) - British Airways revealed the biggest fine in its history on Wednesday after it agreed to pay a fine of 121.5 million pounds in the UK.

Here are some key facts about the Office of Fair Trading (OFT) investigation into fuel surcharge prixe fixing:

- Investigations began in June 2006, with two members of staff - commercial director Martin George and communications chief Iain Burns - being put on leave of absence. The two left the company in October.

- The probe looked at the period between August 2004 and January 2006, during which fuel surcharges rose from 5 pounds per longhaul flight to 60 pounds.

- Under competition law, tipping off a rival about a price change is illegal. Competition law bans firms from agreeing prices.

- BA admitted in May it had colluded with rival Virgin Atlantic Airways to fix passenger fuel surcharges on longhaul flights from August 2004 to January 2006.

- Virgin Atlantic tipped off the OFT and helped with the investigation. In return it has been given immunity and is not expected to be fined.

- Under the OFT's leniency policy, a company which has been involved in cartel conduct and is the first to give full details about it will qualify for immunity from penalties.

- Fuel surcharges were introduced to help airlines cope with rising cost of jet fuel.

- BA has taken a 350 million pound provision to cover possible fines stemming from separate passenger and cargo fuel surcharge probes involving authorities in the UK, United States, Europe, Canada, Australia, South Africa and New Zealand.