Insolvent US passenger airline ATA is suing FedEx for up to $180 million over the termination of acontract for military personnel flights which it claims forced it into bankruptcy.
ATA has filed a lawsuit with the district court in Indianapolis, alleging that FedEx broke awritten agreement from 2006 to contract charter flights for US military personnel. It is seeking$30 million in actual damages and up to $150 million in special damages.
The US airline had operated military charter flights as part of a FedEx-led team for some 20years. The US military contracts passenger and cargo flights from two teams of airlines.
In January 2008, however, FedEx informed ATA that it would no longer require its passengerflights in the new fiscal year starting in October 2008.
ATA, which reportedly generated over half of its revenues from these military flights, thenfiled for bankruptcy on April 2 and suddenly stopped all flights the following day. About 2,200employees lost their jobs as a result.
“Following the abrupt loss of a key contract for our military charter business, it becameimpossible for ATA to continue operations,” the airline stated in a customer message on itswebsite.
A FedEx spokeswoman told US media that the company had no contractual obligation to ATA afterthe end of the current fiscal year in September, and did not understand why ATA had not continuedto operate flights until the end of the year.
