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Delta Wins More LaGuardia Flights in U.S. Slot-Swap Review

Delta Air Lines Inc. (DAL) and US Airways Group Inc. (LCC) can trade takeoff and landing slots at New York’s LaGuardia and Washington’s Reagan National airports if they divest two dozen slot pairs, U.S. regulators said.

Smaller carriers should get eight pairs of slots at Reagan National and 16 pairs at LaGuardia, the U.S. Transportation Department said today in an e-mailed statement. That’s 10 fewer pairs than the U.S. required under a 2009 plan the airlines abandoned because the conditions were too onerous.

Final approval would give Delta 132 more LaGuardia slot pairs and control of about half the flights there, in exchange for trading 42 Reagan National pairs to US Airways. Delta’s advantage at LaGuardia would grow over American Airlines, the second-biggest carrier there.

“This will certainly make American’s New York cornerstone strategy more challenged,” said Jeff Straebler, an aviation debt strategist at RBS Securities Inc. in Stamford, Connecticut.

AMR Corp. (AMR)’s American has 17 percent of LaGuardia passengers, trailing Atlanta-based Delta’s 22 percent, according to the U.S. Bureau of Transportation Statistics. Both also compete at New York’s Kennedy airport for international travelers.

American has focused on routing almost all of its flights through hub cities including its hometown Dallas-Fort Worth International Airport, because those are markets valued by business travelers and are gateways for international routes.

‘On the Ropes’

“This was the battle for New York,” said Robert W. Mann, president of consultant R.W. Mann & Co. in Port Washington, New York, and a former executive at Fort Worth, Texas-based American. Delta will “really have American on the ropes with a big presence at Kennedy and a big presence at LaGuardia.”

LaGuardia and National are so congested that they are under flight restrictions, meaning carriers must trade slots in order to grow. The number of divestitures regulators called for today matches the number Delta and Tempe, Arizona-based US Airways proposed giving up in their May application.

“Upon final approval, we intend to move forward with the plan,” Delta and US Airways said in a joint statement.

US Airways said it expects the slot exchange will be completed by the end of this year once the Transportation Department grants final approval, Executive Vice President Steve Johnson said today on a conference call.

Two Phases

The exchange will be implemented in two phases starting in the first half of 2012, and will be completed in the second half, Johnson said. US Airways has said it can’t make money at LaGuardia and has focused instead on Washington.

Delta and US Airways’ initial application in 2009 drew objections from competitors including Southwest Airlines Co. (LUV), which said the deal would make the two carriers too dominant in those markets.

Southwest has since gained LaGuardia and Reagan flights from its May purchase of AirTran Holdings Inc., and it added slots at New Jersey’s Newark airport that United Airlines and Continental Airlines divested as part of their October merger.

Delta rose 3 cents to $8.17 at 4:15 p.m. in New York Stock Exchange composite trading. US Airways was unchanged at $6.90.

To contact the reporters on this story: Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net; Mary Schlangenstein in Dallas at maryc.s@bloomberg.net.

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net.

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