Friday, January 8, 2016

Another Air Freight Antitrust Class Action Costs Cargo Airlines Dear

And Then There Were Three...........
Shipping News Feature
US – Polar Air Cargo and its parent company Atlas Air Worldwide Holdings have entered into a settlement agreement in yet another large, multi-district antitrust class action against air freight carriers, this one currently underway in New York. Subject to Court approval, the companies have agreed to pay $100 million to direct purchasers of air cargo shipping services, the second-largest payment from any settlement in the litigation, to settle allegations that they colluded with several competitors to fix inflated surcharges on air freight shipments to and from the US. Settlements have now reached over $1.1 billion with three defendants remaining.

The industry-wide litigation arose from accusations surrounding the pricing practices of a number of air cargo carriers from January 2000 through September 2006. Air China, Air India, and Air New Zealand have yet to come to a settlement. This new settlement agreement resolves all claims against Polar and Atlas by the plaintiffs in the class action and the companies continue to deny any wrongdoing or liability, with no admission of any wrongdoing guilt in the settlement agreement (despite the huge pay out).

Pursuant to the settlement agreement, Polar has agreed to make instalment payments over three years to settle the class action, with payments of $35 million due on or before January 15, 2016, a further $35 million on or before January 15, 2017, and the balance of $30 million on or before January 15, 2018. The payments are expected to be funded from cash available on hand. William J. Flynn, President and Chief Executive Officer of Atlas Air Worldwide, commented:

“We are committed to the highest standards of ethics and governance. It is important to put this legacy matter behind us and focus our full attention on the continued execution of our strategic growth initiatives. Our business continues to generate substantial cash flows, and we look forward to capitalising on the significant opportunities ahead to deliver value for our shareholders, employees and customers.”

Atlas Air Worldwide expects to record an expense for the full amount of the Polar settlement in the fourth quarter of 2015, which should total approximately $2.60 per diluted share on an after-tax basis. Excluding this impact, the company says the settlement does not affect Atlas Air Worldwide’s previously issued adjusted earnings outlook for 2015, nor does the settlement affect other related litigation or the company’s ongoing business operations.

This case is in re: Air Cargo Shipping Services Antitrust Litigation, 1:06-MD-1775 (JG) VVP