Air cargo carrier DHL Airways is changing its name to Astar Air Cargo as part of an overall strategic shift by the company to expand its business in the United States.
As part of the new strategy, Miami-based DHL Chairman CEO John Dasburg and other investors announced a plan to buy the company from its parent, DHL Worldwide Express, for $57 million. The deal should be wrapped up by June 30, pending Department of Transportation (DOT) approval. Astar will become a privately held company, with Dasburg and the other partners owning 100% of its stock.
Chicago-based DHL Worldwide had restricted operations in the U.S. after German postal giant Deutche Post purchased a controlling stake in the company in 1998.
That's because DOT aviation rules severely limit both cargo and passenger transport by foreign-owned airlines between U.S. cities -- rules that have essential clipped DHL's wings in terms of its ability to compete against rivals FedEx and United Parcel Service (UPS).
Now, however, with DHL Worldwide's air cargo airline being purchased by a consortium of U.S. citizens led by Dasburg, those DOT restrictions should be lifted.
DHL Worldwide is also banking on the ownership change to help it win approval for its proposed purchase of Seattle-based Airborne's ground delivery operation for $1.05 billion -- an operation that uses over 15,000 vehicles.
Gaining Airborne's ground-delivery network is critical for DHL Worldwide and Astar to compete more effectively against FedEx and UPS.
According to Atlanta-based consulting firm Colography Group, DHL is currently a distant fourth in terms of share of the domestic U.S. expedited freight market. At the end of 2002, FedEx held 46% of the market, UPS 33%, Airborne 19% and DHL just 2%, said Colography.