By James Pilcher
The Cincinnati Enquirer

WILMINGTON, Ohio - Consolidation is inevitable between the Airborne air freight hub here and the DHL hub at the Cincinnati/Northern Kentucky International Airport, the head of the airline that serves DHL said Tuesday.

Given that he leads the company that also runs the Wilmington hub, ABX Air Inc. president and chief executive officer Joseph C. Hete offered no surprises when he said the best site for such a consolidation is this small Clinton County city.

Where DHL will centralize operations "has been the million-dollar question since the merger was first announced over a year ago," Hete said. DHL paid $1.05 billion last year for Airborne's ground assets, including the Wilmington airport and all the buildings there where ABX sorts packages.

"We have 10 times the volume out of here as DHL handles out of the CVG hub, so we've fought some of the battles and the wars that they haven't even seen yet in the expedited cargo business."

Hete answered questions about DHL's pending decision after ABX's first shareholders' meeting.

DHL, the leader in international air freight, purchased Seattle-based Airborne last year as a way to expand its small presence in the domestic market.

ABX was created in August 2003 as a result of the acquisition. Brussels-based DHL is prohibited from owning a U.S. airline because of a federal ban on foreign ownership.

ABX posted a $5.9 million profit in the first quarter of this year based on revenues of $276.7 million. Its stock is traded over the counter; its shares closed at $5.35 Thursday, down 35 cents.

Hete said that any decision about getting the stock listed on an exchange such as Nasdaq would wait until at least after August, when the company's contract with DHL can be reviewed.

The decision about the hubs is in DHL's hands, he said, adding that he has not heard which way DHL is leaning or about the timing.

ABX, which runs the 115-plane airline and operates the hub on behalf of DHL, employs about 6,500 workers at the Wilmington hub, about 50 miles northeast of Cincinnati. ABX processes 1.3 million pieces a day there.

DHL employs more than 1,800 at the Cincinnati airport, where it can handle more than 250,000 packages a night.

DHL officials did not return phone calls late Thursday. They haven't commented in six months about when a decision might be made on the hubs or on the process of deciding whether to consolidate.

Cincinnati airport spokesman Ted Bushelman also would not comment on the pros or cons of either location. "They have a hard decision to make," he said.

Wall Street airline and air freight analyst Helane Becker said that Cincinnati does have some benefits - namely a new $214 million sorting building that is fully automated, plus a potentially more stable and larger work force base in a major urban area. DHL also got several tax breaks for the building.

Becker, with The Benchmark Co. LLC in New York City, said the consolidation decision would eventually come down to capacity and cost. Because DHL would have to expand the Cincinnati airport building to handle more packages, the costs of a consolidation would be lower in Wilmington.

She also pointed out that DHL owns the Wilmington airport, so it pays no extra landing fees and has few noise issues.

"It does not make sense anywhere but here," said Becker, who attended Thursday's meeting.

E-mail jpilcher@enquirer.com