Dogfight in Air Cargo
John H. Dasburg likes to cast himself as an intellectual warrior. He's a voracious reader who often quotes Russian author Aleksandr I. Solzhenitsyn: "The line separating good and evil runs through every human heart." But what most people see is a highly ambitious, hyperkinetic executive who has worked at five different companies in the past four decades.
As soon as Dasburg was sure that Northwest Airlines (NWAC ) was safely out of its financial tailspin in the 1990s, he signed on at Burger King to try to give rival McDonald's (MCD ) a run for its money. When that effort sputtered, he became chairman of struggling, second-tier parcel carrier DHL Airways in April and vowed to make it a contender. Within a month, and much to the board's surprise, Dasburg asked the American and German owners of the company to make good on their promise to sell it to him one day. On May 21, Dasburg announced that he and two U.S. investors would buy Airways outright for $60 million. "I just hate standing still," he says. "There's no worse torture for me."
And that is how Dasburg, 60, found himself smack in the middle of a power struggle among the world's three largest parcel shipping giants: FedEx (FDX ), United Parcel Service (UPS ), and DHL Worldwide Express, which is Dasburg's biggest customer and is owned by German postal monopoly Deutsche Post. While there's no love lost between FedEx Corp. and United Parcel Service Inc., which control 80% of the U.S. parcel market, they're working together to prevent Worldwide from expanding on their home turf. Worldwide, which offers only ground delivery in the U.S., made it clear that is exactly what it intends to do when it announced in late March plans to buy Airborne (ABF ) Inc., the No. 3 player in the U.S. (Worldwide would spin off the air service.)
What does all of this have to do with Dasburg? His little DHL Airways, with 40 planes and $300 million in revenue, has become the battleground in the fight to curtail DHL Worldwide. Dasburg's company basically has just one client, Worldwide. UPS and FedEx say that gives Worldwide control over Airways, even though Worldwide will no longer have a stake in the company nor any directors on the board. Federal law prohibits foreigners from owning over 25% of a U.S. airline or effectively controlling it. (Similar restrictions exist in Europe.) "Deutsche Post runs the show at Airways," says UPS spokesman David Bolger.
Theirs is not just a theoretical argument: FedEx and UPS, both huge political donors, forced the Transportation Dept. to hold a hearing on whether Airways is indeed a U.S. airline. A decision is due by Oct. 31. If the judge sides with FedEx and UPS, Airways will be grounded, the $60 million investment will be wiped out, and Worldwide will lose its ability to ship overnight in the U.S. Most observers expect Airways to prevail, but the judge has been quite critical of the carrier's attorneys.
Dasburg is unrepentant. "FedEx and UPS are monopolists, and they don't want anyone to get a leg up," he says. "But I'm going to fight them." If he wins, he plans to rapidly expand DHL Airways, which would enable him to offer more comprehensive overnight delivery service for DHL Worldwide. He might even acquire Airborne's air service.
Many in the industry hope Dasburg succeeds simply because they want someone to challenge the dominance of the Big Two. "Who cares if the Germans control DHL Worldwide?" says transportation consultant Satish Jindel. "What counts is that much-needed foreign investment is allowed in the airline industry, and DHL becomes a serious new competitor to FedEx and UPS." As for the Germans, Uwe R. Dörken, a member of the Deutsche Post board, says: "We should be welcomed as a fresh breeze for the American customer."
Dasburg says he's willing to help DHL Worldwide but insists he's no puppet. He just changed DHL Airways' name to ASTAR Air Cargo to underscore that point. Sure, Worldwide will remain his biggest customer. "But I intend to broaden our base and add new customers as well," he says.
Dasburg views his life in epic terms. He compares himself to a modern Jean Valjean, the protagonist in Victor Hugo's Les Misérables (his favorite book) who is forced to do evil and then struggles to redeem himself. Dasburg's story isn't quite that dramatic, but it has had its moments. The son of a paint salesman and a department-store clerk in Miami, Dasburg was a restless youth who was more comfortable at sea than in a classroom. "He lived wild," says Richard H. Anderson, a friend who succeeded him at Northwest. He did manage to graduate from the University of Florida with a degree in industrial engineering. It wasn't until he enlisted in the U.S. Navy in 1966 that Dasburg began to mature. He served in Vietnam and just survived a rocket attack. "I thought I was dead," Dasburg says, "but I was just knocked goofy."
That experience fanned a growing spark of ambition. He returned home, enrolled in business school at his alma mater, and proposed to Mary Lou Diaz, a fellow Miamian whom he had dated twice in seven years. Ten years into their marriage, Dasburg got up the nerve to ask why she had said yes. "She told me that with everyone else her future looked predictable," he recalls. "But with me, she didn't know what her future would be."
She was right about that. Dasburg is an attorney who has never practiced law and an accountant who worked only briefly as a certified public accountant. By age 42, he was the chief financial officer of Marriott International (MAR ) Inc. But with success came arrogance. "I measured everyone against myself," he says. "And I was not sympathetic to those with lesser intellect, health, and energy."
Then came a tragedy that knocked the wind out of him. On Dec. 9, 1988, his first-born child, 6-year-old Meredith, was killed when her school bus flipped over. For months, he wept at the mention of her name. He attended mass every day from December to May. Nothing eased the pain. Everything about their home in Potomac, Md., reminded him of Meredith. "I simply had to leave, to escape," says Dasburg.
He quit Marriott to run failing Northwest in 1993. Dasburg spent his 25th wedding anniversary barricaded in his home outside Minneapolis, wheedling union leaders. At 3 a.m., they agreed to pay cuts in exchange for a 30% stake in the airline. The deal saved Northwest from bankruptcy but now flight attendants are suing the company, charging it didn't make good on all of its promises.
At Northwest, Dasburg showed a new humility. "After Meredith's death, I could no longer hold myself to my own high standard," he says. He became more understanding and even began to listen to critics. When unions decried his $750,000 bonus in 1994, Dasburg returned it. The next year, though, he was the highest-paid airline boss, earning $8.7 million, much of it from exercising stock options.
After a decade at the airline, Dasburg wanted to run his own company. DHL Airways was some choice. Just as he took control, FedEx and UPS stepped up their attack. This may not be quite the intellectual fight that Dasburg had in mind, but the battle has been joined.
By Charles Haddad in Miami, with Michael Arndt in Chicago and Jack Ewing in Frankfurt