DOT orders FedEx to repay $29 million
FedEx Corp. said it planned to challenge a U.S. Department of Transportation ruling that it repay $29 million for receiving excess compensation from the government under a relief program to help the airline industry survive the downturn in business following the Sept. 11, 2001 attacks.
Congress passed the Air Transportation Safety and System Stabilization Act under which airlines could submit proof that they were harmed by the shutdown of the aviation system and subsequent travel decline. FedEx claimed it suffered $101 million in damage, but the DOT determined FedEx is only entitled to $72 million, an increase of $3 million from an initial determination earlier this year, because it could document the losses beyond that figure.
FedEx Express said it would file suit over the decision. But earlier this year, a federal appellate judge upheld the DOT's right to limit the claims of FedEx and other airlines. The DOT argues that FedEx didn't offset its losses from the three-day shutdown of the aviation system with business it gained the following months as shippers turned more to all-cargo carriers because of the uncertainties surrounding the use of passenger belly holds.
FedEx argued the DOT gave carriers much smaller than itself a lot more money on a percentage basis than was warranted by the size of their operations based on their total revenue-ton miles.
FedEx said it will record a charge of $48 million its fiscal second quarter, representing the $29 million repayment to DOT and the write-off of a $19 million receivable.
DOT orders FedEx to repay $29 million
