Will Unbundled Amenities be the Future for Budget Hotels? Sponsored This content is created collaboratively with one of our sponsors.
The slots sales were forced upon American by the DOJ, but the newly merged carrier still made out on top with both better than expected returns and the largest operation in the country.
Doug Parker said his airline was paid more than it expected to get for the rights — called slots — at the busy airports.
The U.S. Justice Department put a higher figure — more than $425 million — on American’s gain. Parker said that the government might have added the value of slots that American picked up at New York’s Kennedy Airport, “That’s their valuation, not ours.” The Justice Department did not immediately comment.
In comments filed Monday in federal district court in Washington, the Justice Department said the value of the slots proved that it drove a hard bargain last year when it settled its antitrust lawsuit against the merger of American and US Airways. The airlines agreed to give up some of their slots at LaGuardia and Reagan and two gates each at airports in Los Angeles, Chicago, Boston, Miami and Dallas.
The Justice Department said that American’s sale of the LaGuardia slots to Southwest Airlines Co. and Virgin America is complete, while the transfer of Reagan slots to Southwest, JetBlue Airways Corp. and Virgin America is expected to wrap up soon. Each airline had announced that it won bidding for the slots, but the sale prices were not disclosed. American traded some of the Reagan slots to JetBlue for slots at Kennedy Airport, a deal that Parker said was underway before the lawsuit.
Slots at Reagan, LaGuardia, Kennedy and the Newark, N.J., airport are limited by the government, making them valuable when they hit the market. A pair of slots is needed for each round-trip flight.
Parker told an investor conference in New York that the slots had been recently appraised at $225 million, so getting $381 million was “great news.”
Consumer groups, lawmakers, the Detroit airport and Delta Air Lines Inc. lodged complaints about the settlement.
Some consumer groups complained that the settlement didn’t go far enough to protect travelers. Delta argued that the government was wrong to say that so-called legacy carriers — United Airlines is another — shouldn’t get any of the slots and gates that American is selling. Delta wants Reagan slots and gates at Dallas Love Field.
The Justice Department said that after reviewing public comments, it still believes that the settlement will offset any lost competition from allowing the nation’s third-biggest and fifth-biggest airlines to combine. The merger made American Airlines Group Inc. the world’s biggest airline operator.
Federal law requires a 60-day public-comment period after the government settles an antitrust lawsuit. Even critics of the merger had low expectations that their complaints would change the outcome, however.
Copyright (2014) Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.