British Airways cabin crew told Mirko Fischer to move after he swapped seats with his wife and ended up sitting next to a boy he did not know.
Mr Fischer, 33, accused staff of harassing him and said the policy contravened the Sex Discrimination Act.
BA apologized to the businessman but denied the policy was discriminatory.
A spokesman told the BBC the policy was now under review.
A consent order detailing a settlement between the parties was drawn up at Slough County Court on Wednesday.
Mr Fischer was on a flight from London back to his home in Luxembourg on 20 April 2009 when his pregnant wife Stefanie asked him to swap seats so she could sit next to the window.
He took her middle seat.
He claimed cabin crew told him to return to his original seat as the child next to him was an unaccompanied minor.
The crew said the company’s policy was not to allow adult males to sit next to unaccompanied children.
But Mr Fischer said he felt he was treated as if he was a potential “child molester”.
He said: “I felt humiliated and outraged. They accuse you of being some kind of child molester just because you are sitting next to someone.
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