American Airlines Group Inc. (AAL:US) sold takeoff and landing rights at Washington’s Reagan and New York’s LaGuardia airports for more than $425 million as part of its settlement of a government antitrust lawsuit.
The U.S. Justice Department disclosed the terms in a court filing today in Washington defending the settlement, after receiving public comments. The government said it isn’t proposing any modifications to the agreement.
American was required to sell the so-called slots as a condition of settling an antitrust lawsuit opposing the merger of former American parent AMR Corp. with US Airways Group Inc. last year. Regulators also stipulated that the slots go to low-fare airlines that would preserve competition.
“The competitive significance of the remedy is reflected in the value being paid for the divested Reagan National and LaGuardia slots -- over $425 million -- which is unprecedented in the airline industry and among the most substantial merger remedies in any industry,” the Justice Department said.
American received $381 million for the slots, “way in excess of what we expected,” Chief Executive Officer Doug Parker said today at a JP Morgan Chase & Co. transportation conference. The slots recently were appraised at $225 million, he said.
The flying rights are highly valued by airlines because flights at the two airports are limited under congestion control rules.
The airline’s figure is lower because it included 24 slots American received at New York’s Kennedy airport in exchange for giving JetBlue 16 at Reagan, Parker said.
The settlement reached in November called for 104 slots at Reagan and 34 at LaGuardia to be sold, along with gates at five airports. Southwest Airlines Co. (LUV:US) and Virgin America Inc. purchased slots at Reagan and LaGuardia, while JetBlue Airways Corp. (JBLU:US) won flying rights at Reagan. A slot allows for one takeoff or landing, and a pair is needed for a roundtrip.
American has 180 days from the Dec. 9 closing of the merger to sell two gates each at Dallas Love Field, Boston Logan, Los Angeles International, Chicago O’Hare and Miami International.
The case is U.S. v. US Airways Group Inc., 13-01236, U.S. District Court (Washington).
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