DHL Airways sale won't close today

The sale of DHL Airways to an investor group led by the carrier’s chief executive will not close today as the airline had previously announced.

Ray Lutz, vice president for business development and strategic planning at the carrier, said, “We’re doing everything we can to make it happen. A lot of stuff has to be done, and a lot of people are working very diligently.”

Lutz declined to forecast when the sale will be completed, saying, “I don’t have a timetable for you.”

The purchase price is $57 million.

The investment group is led by chairman, president and chief executive John Dasburg, and will change the carrier’s name to Astar Air Cargo after the transaction is completed. By doing so, they hope to defuse a challenge to the airline’s citizenship brought by FedEx Corp. and United Parcel Service. U.S. law requires that U.S. citizens must own 55 percent of the equity and 75 percent of the voting stock in U.S. airlines. DHL Airways contends that it meets those citizenship requirements because the principal owner is William Robinson, a private investor based in Idaho.

FedEx and UPS contend, however, that the airline is actually controlled by Deutsche Post World Net, a Germany-based company, and its subsidiary, Brussels-based DHL Express. The two big U.S. companies argue that regardless of who owns the airline, it will still be controlled by Deutsche Post and DHL Express because it will continue to get almost all of its traffic from DHL Express’s U.S.-based subsidiary, DHL Worldwide Express.

The citizenship complaint is the subject of a hearing before an administrative law judge at the U.S. Department of Transportation. Judge Ronnie L. Yoder is expected to rule in the case by Oct. 31.

FedEx and UPS have sought to compel testimony from a wide range of Deutsche Post and DHL officials, including Deutsche Post Chief Executive, Klaus Zumwinkel, and DHL Chief Executive Uwe Doerken.

An attorney for Deutsche Post and DHL said FedEx and UPS purported to serve the subpoenas requiring depositions from Zunwinkel and Doerken by e-mail last week. The companies will file a motion today to quash those attempts, saying they are not consistent with U.S. law.

Deutsche Post has offered instead to provide testimony from Wolfgang Pordzik, president and chief executive of Deutsche Post World Net U.S.A., but FedEx and UPS have rejected that offer, the attorney said.

“They think they can get whoever they want,” he said. Deutsche Post has tried on several occasions to reach a compromise with its U.S. rivals both in terms of the documents they are requesting and the individuals they are attempting to subpoena, but FedEx and UPS have refused to compromise, he added.

Dasburg, who became chairman and chief executive of the carrier on April 1, already owns 5 percent of the airline. Assuming the sale goes through, he will own 40 percent, while Richard C. Blum, chairman of San Francisco-based Blum Capital Partners, L.P., a private equity firm, will hold another 40 percent. Michael R. Klein, co-founder and chairman of the board of CoStar Group Inc. and a partner in the Washington-based law firm Wilmer Cutler and Pickering, will own the other 20 percent. The law firm is representing Deutsche Post and DHL in the case before Judge Yoder.