B-145542, APR. 25, 1961

B-145542, APR. 25, 1961

TO MR. POSTMASTER GENERAL:

YOUR LETTER OF APRIL 5, 1961, ASKS OUR CONCURRENCE WITH AN AGREEMENT REACHED BY REPRESENTATIVES OF YOUR DEPARTMENT AND DELTA AIR LINES, INC., CONCERNING THE MANNER IN WHICH DELTA AIR LINES, NC., WILL REPAY TO THE UNITED STATES AN OVERPAYMENT OF MAIL PAY IN THE SUM OF $1,651,863.

IT IS STATED THAT FOLLOWING THE DECISION OF THE SUPREME COURT IN DELTA AIR LINES, INC. V. SUMMERFIELD, 347 U.S. 74, THE CIVIL AERONAUTICS BOARD REOPENED THE MATTER OF MAIL PAY FOR CHICAGO AND SOUTHERN AIR LINES, INC. (NOW MERGED WITH DELTA AIR LINES, INC.). AS A RESULT, THE BOARD DETERMINED THAT THE MAIL PAY PREVIOUSLY PAID FOR DOMESTIC AND INTERNATIONAL MAIL TRANSPORTATION PERFORMED BY CHICAGO AND SOUTHERN DURING THE PERIOD NOVEMBER 1946 THROUGH JULY 1952 SHOULD BE REDUCED BY $1,795,000, SUBJECT TO CERTAIN TAX ADJUSTMENTS. THE BOARD'S OPINION WAS SUSTAINED IN DELTA AIR LINES, INC., V. CIVIL AERONAUTICS BOARD, 280 F.2D 636, CERTIORARI DENIED 364 U.S. 870, AND THE ISSUANCE BY THE BOARD OF A SUPPLEMENTAL ORDER REFLECTING TAX CREDITS AND FIXING THE AMOUNT OF THE OVERPAYMENT AT $1,651,863 IS ANTICIPATED IN THE NEAR FUTURE.

IT IS STATED THAT COLLECTION IN FULL FROM DELTA COULD BE ACCOMPLISHED IN APPROXIMATELY 9 MONTHS, AT THE CURRENT LEVEL OF MAIL PAY, BY WITHHOLDING AND OFFSETTING ALL CURRENT PAYMENTS OF SERVICE MAIL PAY. HOWEVER, UPON CONSIDERATION BY THE DEPARTMENT OF DELTA'S FINANCIAL CONDITION, IT IS PROPOSED TO CONTINUE TO MAKE PAYMENTS TO DELTA IN ACCORDANCE WITH ESTABLISHED PROCEDURES AND DELTA IN RETURN WILL REPAY THE TOTAL AMOUNT DUE OVER A PERIOD OF 36 MONTHS BEGINNING APRIL 1, 1961, WITH INTEREST ON THE UNPAID BALANCE AT 3 1/2 PERCENTUM PER ANNUM TO COMMENCE ACCRUING ON APRIL 1, 1962. PAYMENTS WILL BE MADE AT AN ACCELERATING RATE AS FOLLOWS:

CHART

FIRST 12 MONTHS, AT $30,000 PER MONTH

SECOND 12 MONTHS, AT $40,000 PER MONTH, PLUS INTEREST

THIRD 12 MONTHS, AT $67,655 PER MONTH, PLUS INTEREST

ANY ADDITIONAL BALANCE DUE TO BE PAID IN FULL AT THE TIME OF

THE FINAL PAYMENT.

IN VIEW OF THE FINANCIAL POSITION OF DELTA AS DISCLOSED IN YOUR LETTER AND YOUR STATED BELIEF THAT ANY ACTION BY THE DEPARTMENT TO REQUIRE IMMEDIATE REPAYMENT OF THE ENTIRE AMOUNT WOULD HAVE A SERIOUS IMPACT ON DELTA WHICH, IN TURN, MIGHT HAVE AN ADVERSE EFFECT UPON THE AIR TRANSPORTATION SERVICES BEING PERFORMED BY THE CARRIER IN THE INTEREST OF THE FOREIGN AND DOMESTIC COMMERCE OF THE UNITED STATES, THE POSTAL SERVICE, AND THE NATIONAL DEFENSE, WE WILL NOT INSIST THAT THE ENTIRE OVERPAYMENT BE REPAID IMMEDIATELY OR THAT OFFSET BE MADE FROM CURRENT PAYMENTS OF SERVICE MAIL PAY.

AS INDICATED IN YOUR LETTER, UNDER THE PROVISIONS OF 39 U.S.C. 2401 (A) (1) THE POSTMASTER GENERAL PRIMARILY IS RESPONSIBLE FOR THE COLLECTION OF DEBTS DUE THE POST OFFICE DEPARTMENT. IT IS NOTED ALSO THAT THE AGREEMENT PROVIDES THAT THE DEPARTMENT RESERVES THE RIGHT TO CANCEL THE AGREEMENT IN THE EVENT OF DEFAULT OF ANY MONTHLY PAYMENT DUE THEREUNDER. IT THUS APPEARS THAT THE REPAYMENT PLAN ADEQUATELY PROTECTS THE INTERESTS OF THE UNITED STATES AND IN VIEW OF THE AMOUNT INVOLVED AND THE FINANCIAL CONDITION OF THE DEBTOR THE TIME PERMITTED FOR REPAYMENT DOES NOT SEEM UNREASONABLY EXTENDED.

ACCORDINGLY, YOU ARE ADVISED THAT WE WILL RAISE NO OBJECTION TO THE REPAYMENT PLAN CONSIDERED HEREIN.