ABX Air Declares DHL in Fault of Agreement

[§kyye Candy]

10Q Delayed

http://money.cnn.com/news/newsfeeds/articles/apwire/434f280d87a3c0d38cfa4994aa5b4e42.htm

ABX Air Says 10Q Will Be Delayed
ABX Air Says Quarterly Report Will Be Late As a Result of DHL's Failure to Pay for Services
November 09, 2007: 06:31 PM EST


NEW YORK (Associated Press) - ABX Air Inc. said Friday it won't be able to file its third-quarter report on time, due to DHL Express (USA) Inc.'s failure to pay the air cargo company for services performed under two commercial agreements.
Earlier in the day, ABX said it issued a default notice to DHL, its main customer, claiming that the package delivery giant withheld payments. That news sent ABX shares down 99 cents, or 17 percent, to close at $4.74.
ABX said DHL claimed ABX's third-party revenue exceeded 10 percent of ABX's total revenue _ a threshold agreed upon by the two companies. But ABX argues that DHL didn't include certain costs, such as fuel expenses, in its calculations, and said that DHL's failure to pay may cause ABX to default on some of its credit facilities.
ABX said later in the day it obtained waivers under those facilities, continuing its access to all of its existing credit commitments.
DHL said in a statement that it "wholly rejects" ABX's claims of default and maintains it exercised valid rights under the contracts which allow it to reduce reimbursement obligations for certain overhead expenses.
ABX said that as a result of DHL's action, it needs additional time to confer with its advisers and update disclosures to reflect the effect of this action on its financial results.
The company expects to complete the review and report its third-quarter results as soon as possible next week.
DHL is owned by German shipping company Deutsche Post AG.

 

[hvydriver]

whoa, I did not know they would not allow you to strike. sorry to hear that.

now you have to go through more mediated negotiations before asking for release again? (if you don't make progress I should say.) I bet you guys are just flippin' thrilled!

well, maybe the talks will prove to be fruitful for you. good luck!

I doubt they will, but thanks for the luck!

 

[b707guy]

What is DHL's claimed overage? Are we talking 25% (significant), or 10.1% (insulting)?

And we thought OUR lives were getting interesting...

 

[Bitter]

8 mil is what i heard

 

[rotor&wing]

Last Updated: 5:54 am | Saturday, November 10, 2007

ABX Air and DHL in dispute over payments
BY ALEXANDER COOLIDGE | [email protected]
ABX Air said Friday that its chief customer package shipper, DHL, has defaulted on its contract amid a dispute over expenses.
The Wilmington-based carrier said DHL has withheld $8.8 million in expense reimbursements, saying ABX's business had crossed a key threshold in their contract allowing it to not pay ABX as much. ABX said DHL's contract says it will pay expenses first even in disputes and DHL triggered the default by withholding the money.
ABX officials said the dispute would not create any liquidity issues, but the disruption has forced ABX to notify lenders that it may breach some covenants in other lending agreements. ABX officials say they will likely have to arbitrate the issue.
Chief executive Joe Hete said in a statement the business dispute would not end ABX's business relationship with DHL. He said the company is still trying to work it out with DHL, but so far discussions haven't been fruitful.
"Unfortunately, DHL has chosen a course that leaves us with no alternative, as a public company, other than to inform our shareholders of the steps we are obliged to take to defend their interests," he said.
Hete noted DHL's parent company, Deutsche Post World Net, expressed frustration earlier this week with slowing growth in DHL's U.S. network but said efforts to reverse that "cannot be furthered at the expense of the shareholders of ABX Air."
ABX's stock was hit hard by the news. Its shares closed at $4.74, down 99 cents or 17.3 percent.

 

[abxaviator]

8 mil is what i heard

8.8 million withheld by DHL, but do we know the percentage of ABX revenue in excess of the 10% allowed?

 

[erichartmann]

okay, time to calm down now. After speaking with a few family friends it seems that this may be a dagger in the heart of an Astar buyout of ABX. Seems that since DHL owns 49% of Astar the SEC may investigate both companies (DHL and ABX) for possible collusion since the stock price is down as a result of an announcement of non-payment by DHL. Seems that manipulating stock prices by withholding payment so you can buy up remaining shares at a deflated price is against the law. Who would have figured? So unless DHL plans to remove ABX from the network, which is possible, neither DHL or Astar can benefit as a result of their actions.

Oh well, this may kill the JAN deal too.

Perhaps. Someone else reported that DPWN has not yet completed the deal with Astar. I wonder if DPWN/DHL might cancel that deal in light of what is now going on.

 

[hvydriver]

Perhaps. Someone else reported that DPWN has not yet completed the deal with Astar. I wonder if DPWN/DHL might cancel that deal in light of what is now going on.

It's not cancelled. It's done. They're just deciding where to show the expense. Pg. 31 of the Interim Report.

 

[rotor&wing]

Perhaps. Someone else reported that DPWN has not yet completed the deal with Astar. I wonder if DPWN/DHL might cancel that deal in light of what is now going on.

LOL........nice eric cartman. Getting your hopes up?

 

[HeavyjetDC8]

Regardless of who owns whom, DHL has for all intents and purposes failed to gain control of the lift into and out of KILN, which means that it now ultimately fails to control its own operation in the US.

It would have make sense, from the DHL perspective, to have made their stake in Astar and have Astar buy ABX on the day they purchased Airborne Express. A bit late for that now though.

Interesting times, because all the logical moves have failed to occur and what happens next is going to be the second best course of action. As I've said before, the bottom line is efficient lift, and he who has it will probably end up calling the tune.


shooter

"whoa, I did not know they would not allow you to strike. sorry to hear that."

Unfortunately, courtesy of the RLA, we are all precluded from striking. Never mind Astar, you think the ABX pilot group would be putting up with the latest crap if we could simply down tools and walk?