ABX Air said in a Form 8-K filing with the Securities and Exchange Commission today that DHL has withheld payments to ABX Air otherwise due for reimbursement of legitimate expenses under the ACMI Service Agreement and the Hub and Line-Haul Services Agreement, which govern the business relationship between the companies.
The dispute centers on a claim by DHL that certain ABX Air expenses are no longer eligible for reimbursement in full by DHL under the agreements, because ABX Airs revenues from other customers have exceeded a 10% threshold of ABX Airs total revenues. ABX Airs position is that DHL has improperly excluded from its calculation certain ABX Air revenues that stem from reimbursements for fuel expenses that ABX Air incurred on behalf of DHL. When such fuel-related revenues are properly included in the calculation, ABX Airs revenues from other customers have not exceeded the 10% threshold in the agreement. In addition, DHL is claiming that ABX Airs costs in maintaining its public company status and certain professional fees incurred by ABX with respect to an unsolicited indication of interest from ASTAR Air Cargo are not recoverable under the agreements.
Joe Hete, president and CEO of ABX Air, said, As the events described in our 8-K filing indicate, our decision to declare DHL in default of our ACMI and Hub Services commercial agreements was taken only after intensive efforts on our part to resolve this issue directly with DHL, or to continue normal operations under explicit language in the agreements for working together while disputed matters are resolved through arbitration. 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.
At the same time, I want to reaffirm that ABX Air is today, and intends to remain, DHLs principal
We are aware of the disclosures yesterday by the management of DHLs parent company, Deutsche Post World Net, that growth in DHLs
ABX Air also stated that the refusal of DHL to pay the amounts due to ABX Air under the agreements may cause it to be in default under certain of its credit facilities. Should this be the case, ABX Air will consider whether to seek reimbursement from DHL for any damages or liabilities ABX Air may incur as a result of any such default.
ABX Air said its alternatives include, but are not limited to, pursuing the dispute resolution process set forth in the agreements, negotiating with DHL to resolve the disputed issues, or any other option available to ABX Air at law or in equity.