UPDATE: FedEx Must Pay $66 Million To Former ATA Airlines

FedEx Corp. (FDX) has been ordered to pay $66 million to ATA Airlines Inc., more than two years after ATA filed for bankruptcy and ceased operations, blaming FedEx for much of its financial problems.

A jury for the U.S. District Court in Indianapolis agreed with ATA that FedEx breached a contract with the Indianapolis-based airline. It awarded ATA about $22 million in lost profit for fiscal-year 2008 and about $44 million for fiscal 2009.

FedEx spokeswoman Sandra Munoz said FedEx is reviewing its options and may appeal the jury award.

"With all due respect to the jury, we disagree with the findings," Munoz said, although she declined to elaborate.

ATA filed for bankruptcy protection in April 2008 and immediately ceased all operations, blaming the "unexpected" termination of a military transport subcontract overseen by FedEx. At the time, ATA said it was the largest provider of transport for U.S. military personnel and their families under the program run by the Air Mobility Command, or AMC, of the U.S. Air Force.

ATA, which had been restructuring its smaller commercial passenger business, said the loss of the military business left it unable to secure additional funding or a strategic buyer or partner. The military business accounted for $335 million of ATA's total revenue of $402 million in 2007, according to its 2008 bankruptcy filing.

ATA sued FedEx in June 2008.

-By Bob Sechler, Dow Jones Newswires; 512-258-1690; bob.sechler@dowjones.com

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