Delta/US Air to sue US over route plan rejection

WASHINGTON May 4 (Reuters) - Delta Air Lines (DAL.N) and US Airways Group (LCC.N) will challenge a U.S. government decision rejecting their compromise for restructuring operations at two East Coast airports, the companies said on Tuesday.

Delta and US Airways, in a joint statement, called the Transportation Department decision inexplicable and legally questionable.

The companies said they intend to appeal in federal court.

The two proposed a swap in August that would give US Airways 42 new slots at Reagan National in Washington and Delta 125 slots at New York LaGuardia.

The unusually large deal was proposed as an asset sale without any exchange of cash.

Slots are government-regulated takeoff and landing rights at crowded airports.

Both carriers are looking to strengthen operations where they focus hardest on business travel. US Airways wants to play to its Washington strength. Delta is ramping up New York service for domestic and international flights.

Federal aviation officials approved the initial plan in February with giveback requirements. Delta and US Airways responded in March with a counterproposal to divest certain slots and grant access to rivals like JetBlue (JBLU.O), AirTran AAI.N and Canada's WestJet (WJA.TO).

Regulators, however, on Tuesday called the counteroffer insufficient to ensure competition.

(Reporting by John Crawley; Editing by Richard Chang)