DHL to buy Atlas Air division for $150 million

Mumbai: Logistics and air cargo service provider DHL will acquire Polar Air Cargo Worldwide, a division of Atlas Air Worldwide Holdings (AAWW), for $150 million in cash. DHL has agreed to pay cash for a 49 per cent equity stake in Polar Air Cargo Worldwide, Inc, a stake that has a 25 per cent voting right, AAWW said.

The move is part of a strategic partnership between DHL and Polar Air Cargo, which will allow DHL to increase the capacity of its trans-Pacific air routes. The arrangement includes a strategic 20-year commercial agreement that ensures DHL access to aircraft capacity in key global markets, while providing the AAWW companies with a valuable, long-term customer and potential revenue stream in excess of $3.5 billion over the full-term of the agreement. In addition, DHL will have access to available additional aircraft capacity from AAWW's subsidiary Atlas Air, Inc. The agreement, however, is subject to review at five-year intervals.

DHL will pay $75 million at the close of the transaction and another $75 million in two instalments - the first by January 15, 2008 and the second on November 17, 2008.

"DHL is already the market leader in Asia and the partnership with Polar will help us offer even higher quality levels to customers, while at the same time improving profitability on the fast-growing routes between the US and Asia," John Mullen, head of DHL's Express division, said in a statement.

William J Flynn, president and CEO of AAWW, added, "This is a landmark transaction and exciting partnership for our company. Our strategy has been to maximise the value and potential of our scheduled-service business, and this transaction accomplishes that goal. DHL is a pre-eminent express service provider and the world's largest buyer of third-party airlift capacity. Their investment and the long-term commercial agreement will markedly strengthen our scheduled-service business, and will enhance our ability to provide customers with superior service in key international markets. Further, it provides our company with a significant increase in our cash liquidity and a very attractive long-term revenue stream. Indeed, this transaction reinforces our leadership position as an outsource provider of air cargo services, and greatly enhances the value of our company."

Polar Air Cargo, Inc. (Polar) is a global leader in the international air cargo market, specialising in time-definite, airport-to-airport scheduled freight service. The company provides a critical link in the international logistics chain by connecting major cargo markets in the Americas, Asia, Europe and the Far East via frequent Boeing 747 freighter service. Polar and its sister company, (Atlas), are wholly owned subsidiaries of (AAWW), based in Purchase, N Y.