Cargo carrier DHL Airways Inc., Miami, said yesterday it will change its name to AStar Air Cargo Inc. upon completion of its acquisition by chairman/CEO John Dasburg, Richard C. Blum of San Francisco's Blum Capital Partners and Michael R. Klein, a Washington business executive and lawyer.
The transaction is to be completed by June 30. It is subject to approval by the U.S. Department of Transportation.
Dasburg now owns 5 percent of the airline. The remaining shares of DHL Airways are being purchased from Idaho private investor William A. Robinson, who owns 75 percent of the company's voting shares, and the U.S. arm of DHL International, a Brussels-based subsidiary of Deutsche Post, which controls the remaining voting shares. The cost of the transaction will be $57 million.
The acquisition was submitted to the DOT on May 21.
The news comes as the DOT investigates whether DHL Airways violates laws limiting how much a foreign entity can hold in a U.S.-based airline. Federal law prohibits foreign citizens or corporations from controlling more than 25 percent of the voting shares of a U.S. airline and requires U.S. carriers to be controlled by U.S. citizens.
Deutsche Post, the German postal service, now holds a 25 percent voting stake in DHL Airways. The airline's biggest customer, DHL Worldwide Express, is a U.S. partner of Deutsche Post.
DHL said that though AStar Air Cargo will continue to provide contract service for DHL Worldwide Express, the name change will reinforce the fact that AStar is not a corporate affiliate of DHL Worldwide Express.
Meanwhile, according to news reports, the DOT's chief administrative law judge overseeing the case said at a pre-hearing conference yesterday that he would proceed with deciding whether DHL Airways is a U.S.-owned company.
Congress had ordered the DOT to investigate complaints from FedEx Corp. and United Parcel Service that Deutsche Post effectively owns and controls DHL Airways, and therefore violates the U.S. law limiting foreign ownership of domestic airlines.
The outcome of the DOT investigation also could affect plans by Deutsche Post unit DHL Worldwide to buy Airborne Inc.'s ground delivery business for $1 billion. Airborne's air operation would become an independent public company called ABX Air Inc.
FedEx and UPS also have filed proposals with the DOT charging that the Airborne acquisition may violate U.S. limits on foreign control of domestic airlines.
At the conference, DHL attorney Sandy Litvack said the purchase by an investment group led by DHL management could make the proceedings moot.
But according to reports, administrative law judge Ronnie Yoder said he was not inclined to change course because of the sale, though DHL could apply for a delay in the proceedings based on the sale.
“This case has been referred to us for a hearing. That's what we're going to do,” Yoder said. “We will look at the facts based on totality of circumstances.”
