Southwest, Virgin win waiver to purchase LaGuardia slots

ATLANTA/WASHINGTON Thu Dec 5, 2013 7:35pm EST

A Southwest Airlines Boeing 737NG plane taxies at Los Angeles International Airport (LAX) in Los Angeles, California, April 3, 2011. REUTERS/Hyungwon Kang

A Southwest Airlines Boeing 737NG plane taxies at Los Angeles International Airport (LAX) in Los Angeles, California, April 3, 2011.

Credit: Reuters/Hyungwon Kang

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ATLANTA/WASHINGTON (Reuters) - Southwest Airlines (LUV.N) is purchasing 22 of the 34 takeoff and landing slots at New York's LaGuardia Airport that American Airlines (AAMRQ.PK) has given up in return for government approval of its merger with US Airways Group Inc LCC.N.

Virgin America plans to buy the remaining 12.

US Airways and American agreed to give up dozens of airport slots to settle a lawsuit brought by the Department of Justice that sought to block the airlines from merging to create the world's largest carrier.

Southwest confirmed the purchase in a company statement on Thursday, while the Federal Aviation Administration said in a waiver that Virgin America had permission to buy the 12 slots.

"We are pleased the U.S. Department of Justice approved our agreement with American Airlines to acquire these slots at LaGuardia," Bob Jordan, Southwest's executive vice president, said in a statement. "This is terrific news for low-fare customers who want greater access to New York City."

Mike Trevino, American Airlines spokesman, said: "American and the other carriers have agreed to transition the operation of the slots over time in order to minimize customer disruption."

Terms of the sales are not known, and Virgin America said its deal was not final.

"We will release more details on our network plans in the weeks ahead - after the process is finalized," Virgin America spokesman Madhu Unnikrishnan said in a statement.

In the deal with the Justice Department, the merger partners also agreed to give up 52 pairs of slots at Reagan National Airport, just outside Washington, D.C. The merger is due to close December 9.

JetBlue (JBLU.O) has been expected to be interested in the slots at Reagan National that it is currently leasing from American. Southwest added it also looks forward to bidding on the Reagan National slots.

US Airways declined to comment.

American and US Airways announced in February that they planned to merge to form the world's largest airline. The Justice Department sued to stop the deal, saying it would lead to higher fares. The sides announced a settlement on November 12 after the airlines agreed to a long list of divestitures.

In addition to slot sales, the airlines agreed to give up gates at five other major airports: Boston Logan International Airport, Chicago O'Hare International Airport, Dallas Love Field, Los Angeles International Airport and Miami International Airport.

The Justice Department argued that the slot and gate sales would give low-cost competitors better access to some of the country's busiest airports. Analysts, however, said that a relatively small number of flights would be affected and any change would be incremental.

The Justice Department selects which airlines are eligible to buy the assets that the airlines must sell. Large carriers Delta Air Lines (DAL.N) and United (UAL.N) are believed to have been excluded from the sale.

(Reporting by Diane Bartz and Karen Jacobs; Editing by Steve Orlofsky)

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