Bankrupt ATA Airlines Sues FedEx Over Broken Letter Agreement

June 11, 2008 6:22 p.m. EST

New York, NY (AHN) - In a complaint filed against Federal Express, bankrupt airline ATA claims FedEx breached a military shipping agreement that lasts until September. The contract represents the majority of ATAs revenue.

ATA received a Jan. 22 statement from FedEx that it would no longer have ATA as part of a team flying military charters. ATA had been on the FedEx team for more than 20 years. ATA said the loss of this work took away nearly all of the company's military charter business.

The military business accounted for $335 million of ATA's $402 million of revenue in 2007.

The agreement that ATA claims FedEx broke was signed in September 2006 and called for 50 percent of the military charters to be assigned to ATA.

"FedEx's abrupt termination of ATA from the FedEx team and ATA's resultant demise stranded an untold number of U.S. soldiers, sailors and Marines stuck in the Iraqi and Afghan theaters, thus postponing their homecoming," ATA said in the complaint, according to Dow Jones Newswire.

ATA seeks $30 million in actual damages and up to $150 million in special damages.