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MAS to pay compensation over contract breach

Posted on: June 5, 2009


AFP – Tuesday, June 2

KUALA LUMPUR (AFP) – – Malaysia Airlines (MAS) said it has been ordered to pay 9.8 million dollars in compensation by the European Union after breaking a contract with a German ground-handling firm.

Proceedings were brought against MAS by Advanced Cargo Logistic (ACL) in September 2004 after the Asian carrier breached an agreement to maintain its European cargo hub at Germany’s Frankfurt-Hahn airport for 10 years from 1999.

ACL had sought 62.7 million euros (89 million dollars) at the arbitration panel.

But MAS said in a statement late Monday it “is taking further advice on challenging the award and resisting its enforcement.”

It added: “Due to prudent provisioning in previous years, and given that the award orders MAS to pay only about 10 percent of the sum originally claimed by ACL in 2004, the award was not expected to have a material adverse impact on the financial position of MAS.”

It was reported that the carrier had 3.57 billion ringgit (992 million dollars) in cash as of December 31, 2008.

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