As per media reports, airlines in the U.S. have submitted
their bids to acquire slots at Washington's Regan National
Airport (DCA) as part of the mega merger deal between American
Airlines and U.S. Airways Group Inc. that led to the formation of
American Airlines Group Inc.
If media sources are to be believed, an announcement relating
to the sale of the slots at DCA could be made as early as this
week. However, they remain unclear about the number of carriers
that have shown interest in the bidding process.
In Nov 2013, both American and U.S. Airways got the nod for
the merger after clearing a series of legal hurdles. As part of
the deal, the carriers agreed to give up 52 take-off and landing
slots at DCA and 17 pairs at La Guardia airport (LGA) in New
York. Additionally, the carriers have to divest two gates and
related facilities at each of the Boston, Chicago, Dallas, Los
Angeles and Miami airports.
The Department of Justice (DOJ) argued that the opening up of
slots to rival carriers will enhance accessibility at some of
busiest airports and simultaneously heighten competition. On the
flip side, legacy carriers like
Delta Air Lines Inc.
) has previously insisted that DOJ should not be biased toward
low cost carriers while divesting airport slots and assets.
The divesture process has already begun with
Southwest Airlines Co.
) acquiring 22 take-off and landing slots while Virgin America
acquiring 12 such slots at the busy international airport of
Apart from Southwest, Delta and
JetBlue Airways Corp.
) have shown interest in acquiring slots at DCA. Notably, 16 of
the 104 slots at DCA are already leased to JetBlue, and the New
York based carrier will try to purchase as many slots as possible
to strengthen its position in the capital city.
Divesture of these important slot pairs will give smaller
players a meaningful opportunity to expand their presence in
Washington. However, it remains to be seen whether Delta will
ultimately win any slot, given the inclination of the DOJ toward
Improved operational performance in Dec 2013 has already
pushed the major airline stocks upward. We believe this news
could provide further impetus to investors to remain bullish on
AAL currently carries a Zacks Rank #3 (Hold).
AMER AIRLINES (AAL): Free Stock Analysis
DELTA AIR LINES (DAL): Free Stock Analysis
JETBLUE AIRWAYS (JBLU): Free Stock Analysis
SOUTHWEST AIR (LUV): Free Stock Analysis
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