Air cargo carrier Polar Air Cargo and its majority shareholder, Atlas Air Worldwide Holdings Inc., said today they have agreed to pay $100 million over three years to settle allegations Polar conspired to fix air cargo prices on shipments moving to and from the U.S. from January 2000 to September 2006.
The settlement is the second largest achieved to date in a litigation battle that has lasted since 2006, when the case came before a U.S. district court in New York. Only Korean Air's $115 million settlement is larger.
The suit, brought by users of air cargo services, alleged that multiple carriers, acting like a cartel, conspired to deliberately inflate cargo prices during the period in question. To date, 25 airlines have settled for a total of $1.14 billion. Of those, the courts have granted final approval to settlements involving 22 airlines and totaling $848 million. Air China, Air India, and Air New Zealand are the three remaining defendants that have not settled.
Purchase, N.Y.-based Atlas owns 51 percent of Polar. The balance is owned by DHL Express, the express-carrier unit of German transport and logistics giant Deutsche Post DHL. Polar offers various air cargo services, but is best known for operating freighters under a model where it provides the aircraft, crew, maintenance, and insurance under contractual agreements. DHL Express is an anchor customer of Polar.
Under the settlement, Polar will pay $35 million on or before Jan. 15; another $35 million on or before Jan. 15, 2017; and the remainder on or before Jan. 15, 2018, Atlas said in a statement. The payments will be funded from cash available on hand, Atlas said. The companies said the settlement resolves all outstanding claims, adding that they continue to deny any wrongdoing or liability, and did not admit to either in the settlement agreement.
William J. Flynn, Atlas president and CEO, said in the statement that it is important to put this legacy matter behind us and focus our full attention on the continued execution of our strategic growth initiatives. Flynn said Atlas business is generating significant cash flows and that the cost of the settlement will not adversely impact ongoing operations.
The case is unrelated to a legal matter involving a group of air freight forwarders that have agreed to pay $197 million to settle claims brought by shippers that the forwarders engaged in 11 conspiracies to fix prices on freight surcharges in violation of the Sherman Antitrust Act.
The plaintiffs, who first filed suit eight years ago, said that shortly after the Sept. 11, 2001, terrorist attacks, the forwarders conspired to pass on all post-9/11 surcharges to their customers by agreeing to fix, inflate, and maintain several subsequently arising surcharges for domestic forwarding services..
In late December, DHL Global Forwarding, Deutsche Post DHLG's forwarding unit, agreed to pay $53 million to settle claims brought against it. DHL Global Forwarding's payment, along with 10 other settlements, brought the total amount to $197.6 million. This is the second round of settlements in the eight-year litigation..
Other forwarders that settled in the second cycle include Seattle-based Expeditors Inc.; Swiss firm Kuehne & Nagel International A.G.; UPS Inc.; Swiss firm The Panalpina Group; German firm DB Schenker; and French firm Geodis, S.A..