DOT Ruling Could Aid Deutsche Post in AStar Fight

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The U.S. Department of Transportation allowed a review of the relationship between AStar Air Cargo, formerly DHL Airways, and Deutsche Post to continue, but delivered a key ruling yesterday that aids both companies.

The DOT limited the scope of an administrative law judge's review of AStar's ownership to its current owners only. In May, DHL Airways, Miami, announced that a group of U.S. investors purchased the company, of which Deutsche Post previously had a 25 percent share, and that its name would change to AStar.

Federal law bars control of U.S. airlines by foreign interests. Deutsche Post rivals United Parcel Service and FedEx argue that AStar gets most of its revenue from Deutsche Post's DHL Worldwide Express business unit and thus is substantially controlled by Deutsche Post.

The DOT also extended the deadline for the judge to issue a ruling in the case by 30 days to Dec. 1.

Deutsche Post issued a statement praising the DOT ruling and said this vindicated its position that its past ownership interest in AStar was irrelevant to the proceedings. Deutsche Post World Net president/CEO Wolfgang Pordzik said the company had been "dragged" into the legal wrangling over AStar's ownership and that the "false allegations" by its competitors had failed to sway the DOT.

FedEx was pleased with the DOT's ruling and said it welecomed extra time for the administrative law judge to issue a rulling, said Kristin Krause, FedEx spokewoman. The company is looking forward to a public hearing where it believes it will present evidence showing that Astar is controlled by a foreign entity.

In a statement, UPS said that there is evidence proving Deutsche Post controlled DHL Airways and that it continues to do so despite the restructuring of the company into AStar. UPS said it looked forward to a public hearing on the matter.

The AStar case may have implications for Deutsche Post's planned acquisition of part of U.S. shipper Airborne Inc. DHL Worldwide Express is set to purchase the ground operations of Airborne, which will then spin off its air delivery operations into an independent company.


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