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United Airlines to Pay $49 Million to Settle Mail Fraud Charges

United Airlines improperly secured millions in payments through a data automation scheme, federal officials charged. The carrier settled the case.
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United Airlines  (UAL) - Get United Airlines Holdings Inc. Report agreed to pay more than $49 million to resolve criminal charges and civil claims relating to fraud on Postal Service contracts for transportation of international mail, federal officials said Friday.

Shares of the Chicago air carrier at last check were up 1.7% to $52.66.

The U.S. Justice Department said in a statement that United had entered into International Commercial Air, or Icair, contracts with the U.S. Postal Service to transport mail internationally.

United was required to provide bar code scans of mail receptacles to the post office after taking mail receptacles and when the receptacles were delivered to the foreign postal administration or other intended recipient.

Between 2012 and 2015, United submitted false delivery scan data to make it appear that it and airlines with which it worked were complying with the Icair requirements, when in fact they were not. 

United submitted automated delivery scans based on aspirational delivery times, the government said, that did not correspond to the actual movement of the mail.

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Through this data automation scheme, officials said, "United secured millions of dollars in payments from the USPS to which United was not entitled under the Icair [contracts]."

United agreed to continue to cooperate with the Criminal Division’s Fraud Section and to report any evidence or allegation of a violation of U.S. fraud laws. The air carrier also agreed to strengthen its compliance program and to submit yearly reports to the fraud section.

"The U.S. Postal Service is a valued customer for United, and we are glad to have remedied these procedures and look forward to serving the Postal Service in the future," the airline said in an email.

Officials noted United's history, which includes a 2016 nonprosecution agreement relating to potential criminal bribery violations. They arose from United's establishment and operation of a nonstop route between Newark Liberty International Airport and Columbia Metropolitan Airport in South Carolina.

In 2019, American Airlines  (AAL) - Get American Airlines Group Inc. Report agreed to pay $22 million to settle claims that it falsely reported the times it transferred possession of U.S. mail to foreign postal administrations or other intended recipients.

Earlier this week, United and American were two of several airlines upgraded by Deutsche Bank analyst Michael Linenberg, who said the sector was "back on track."

Separately, United was operating a Boeing  (BA) - Get The Boeing Company Report jet that showered debris over a Denver suburb on Saturday after a Pratt & Whitney engine failed.