FedEx Corp. plans to contest a U.S. Department of Transportation order that demands repayment of $29 million.
FedEx, Memphis, TN, said Friday that the DOT issued a final order in its review of the FedEx Express claim for compensation under the Air Transportation Safety and System Stabilization Act.
This act provided financial relief to U.S. air carriers affected by the events of Sept. 11, 2001. Under its interpretation of the act, the DOT found that FedEx Express is entitled to $72 million of compensation, $3 million more than its initial determination.
Because FedEx Express previously received $101 million under the act in 2002, the DOT has demanded repayment of $29 million.
FedEx Express said it would contest this ruling judicially and continue to pursue its compensation claim.
However, it said it no longer can conclude that collection of the entire $119 million that the company expected and recorded in fiscal 2002 is probable, so it will record a charge of $48 million in its fiscal second quarter, representing repayment of $29 million to the DOT and the write-off of a $19 million receivable.
Any additional amounts recovered by FedEx Express on this matter will be recognized in the period that they are realized, the company said.
FedEx Corp. still expects second-quarter earnings of $1.10 to $1.20 per diluted share.
