DHL Express has gained official US government approval to buy a 49% stake in cargo airline PolarAir for $150 million to build up its Asia-US transpacific network. Polar Air operates scheduled
freighter flights between destinations in North America, Asia (China, Japan, Korea), South Americaand Europe (Amsterdam).Atlas Air Worldwide Holdings (AAWW), the Polar Air parent company, announced that it hasobtained Final Orders from the US Department of Transportation (DOT) approving the transaction thatwas announced last November. The DOT approvals cover both the ownership structure of thepartnership between Polar and DHL Express and the intra-company transfer of airline certificatesand route authorities to Polar from another AAWW subsidiary.
The approvals are integral steps in the process leading up to the closing of the transactionbetween Polar and DHL Express. The parties are now working on the remaining steps, which includeFAA and foreign regulatory approvals, AAWW said.
“This is a significant milestone in completing our strategic partnership with DHL Express. Weanticipate obtaining the remaining necessary approvals and closing the transaction in the latesecond quarter,” said William J. Flynn, President and CEO of AAWW.
The transaction includes the acquisition of a 49% equity interest, with a 25% votinginterest, in Polar by DHL Express, as well as a 20-year commercial arrangement that will providePolar with a long-term, anchor customer and DHL with access to aircraft capacity in key globalmarkets.
On November 28, 2006, the parties executed a stock purchase agreement for the strategicpartnership with DHL Express. Upon closing of the transaction, the remaining commercial agreementswill be signed and DHL Express will acquire a minority ownership interest in Polar in exchange forcash payment of $150 million, $75 million of which will be paid upon closing, and $75 million to bepaid in two instalments on January 15, 2008 and November 17, 2008, subject to certain accelerationprovisions.
Under the terms of the 20-year commercial arrangement, which includes blocked-space andrelated flight-service-support agreements, DHL Express will have access to lift capacity throughsix Polar 747-400 Freighters plus access to additional available ACMI aircraft from AAWW’ssubsidiary, Atlas Air, Inc. This agreement will provide the AAWW companies with a valuable,long-term customer and potential revenue stream in excess of $3.5 billion over the full term of theagreement.
