Issues order adjusting total compensation to $72 million, FedEx must return $29 million

FedEx Corporation has announced that the United States Department of Transportation has issued a final order in its administrative review of the FedEx Express claim for compensation under the Air Transportation Safety and System Stabilization Act.

Under their interpretation of the Act, DOT determined that FedEx Express is entitled to $72 million of compensation under the Act, an increase of $3 million from its initial determination.

Because FedEx Express had previously received $101 million under the Act, DOT has demanded repayment of $29 million.

While FedEx Express will vigorously contest this determination judicially and will continue to aggressively pursue its compensation claim, it can no longer conclude that collection of the entire $119 million recorded in fiscal 2002 is probable.

Accordingly, the company will record a charge of $48 million in its fiscal second quarter, representing repayment of $29 million to the DOT and the write-off of a $19 million receivable. Should any additional amounts ultimately be recovered by FedEx Express on this matter, they will be recognized in the period that they are realized.

The Air Transportation Safety and System Stabilization Act provided financial relief to US air carriers impacted by the events of September 11, 2001.

FMI: www.fedex.com, www.dot.gov