DOT orders FedEx to repay USD29 million
FedEx Corp. is challenging an order by the U.S. Department of Transportation to repay $29 million of the federal money it received after the 2001 terrorist attacks, a spokesman said Friday.
The Air Transportation Safety and System Stabilization Act provided financial relief to U.S. air carriers after the Sept. 11, 2001, attacks.
FedEx was paid $101 million under the act in 2002. But a review by the Department of Transportation determined that the company was only entitled to $72 million and it wants FedEx to repay the rest.
“We will vigorously challenge this,” FedEx spokesman Jess Bunn said. “We’ve already started looking at various ways to appeal this decision.”
FedEx official Kristin Krause said the company had independent auditors review its claims to the federal government and disagrees with the way DOT is interpreting the law.
“The law was written to reimburse careers that incurred losses related to Sept. 11,” Krause said in a phone interview from Washington.
FedEx’s package delivery was interrupted when air traffic was grounded during the days following the terrorist strikes, officials said. But the company has remained profitable while the passenger airlines also covered by the federal law have struggled to avoid or emerge from bankruptcy.
FedEx had expected to receive a total $119 million in federal payments. The company will take a second-quarter charge of $48 million to cover the repayment as well as to write off the additional $19 million it had expected, Bunn said.
FedEx said it still expects second-quarter earnings of $1.10 to $1.20 per share. Analysts surveyed by Thomson First Call expect a profit of about $1.17.
Shares of FedEx fell 43 cents to $94.37 in midday trading on the New York Stock Exchange.
