Should Get Around UPS, FedEx Complaints About 'Foreign' Ownership and Control

DHL is positioning itself to compete fiercely for Pentagon contracts. That's the quick and obvious conclusion drawn by industry analysts, as they reacted to the news that DHL Chairman and CEO John Dasburg and select U.S. investors will purchase all the outstanding shares of DHL airways.

A protectionist law, disguised under a cloak of concern for national security, says that major DoD transportation contracts need to be signed only with US-owned and -controlled firms. That law came up, provocatively, as the nation girded for the war action against Iraq. As the country went to war in the middle east, the cargo companies went to war in the lobbies of D.C., provoking DHL to do some major restructuring. DHL's latest action is an object lesson on how the markets cannot be bent around government decrees, as DHL's realignment continues, with this latest announcement from DHL Airways:

DHL Airways announced Wednesday that a U.S. investor group, led by its Chairman and Chief Executive Officer John Dasburg, has reached an agreement to purchase all of the outstanding shares of DHL Airways, Inc. Dasburg said that the transaction will further solidify the airline's U.S. control and management, while putting the company on a new path toward becoming a global air cargo leader. The name of the company will be changed in the near future.
 
The other members of the investment group are Richard C. Blum, Chairman of San Francisco-based Blum Capital Partners, L.P., a leading private equity firm, and Michael R. Klein, a Washington, D.C. business executive and lawyer who is co-founder and Chairman of the Board of Directors of CoStar Group, Inc.

According to Dasburg, the company will continue to focus on what has been its core business - "wholesale" overnight "small package" business - while at the same time looking for attractive opportunities to expand its charter, Department of Defense, and Postal Service business. Growth will occur both through internal expansion and through future acquisitions. The airline also will improve utilization of its existing fleet of 40 aircraft for additional charter opportunities.

Dasburg currently owns 5% of the airline. The remaining shares of DHL Airways are being purchased from Idaho private investor William A. Robinson and from DHL Holdings (USA), Inc.

The prospective owners expect to complete the acquisition of DHL Airways by June 30, 2003 and plan to operate the airline as a privately held company. Dasburg will continue to serve as Chairman and CEO, a position he assumed on April 1, 2003. The acquisition is subject to approval by the U.S. Department of Transportation.

DHL Airways also announced that, upon completion of the sale of the company, it would enter into a new 11-year agreement to provide air cargo services for DHL Worldwide Express.

In announcing the details of the acquisition, Dasburg emphasized that DHL Airways is now -- and will continue to be -- an American company. "DHL Airways is all-American owned and all-American managed. It employs nearly 1,000 Americans," said Dasburg. Dasburg also noted that the airline and its employees were actively engaged in providing service to the U.S. Department of Defense during the Iraqi conflict, and currently serves the U.S. military with missions to Guantanamo Bay, Cuba, Roosevelt Roads, Puerto Rico, Ramstein Air Force Base, Germany, and other military bases around the world. The company is headquartered in Miami, Florida.

FMI: www.dhl-usa.com/index