Southwest Wants the New American’s Washington-Reagan Slots

The Department of Justice’s antitrust lawsuit against the American Airlines and US Airways merger is slated to get under way next month, but Southwest CEO Gary Kelly figures the merger will likely take place in some form, and he’d like to bid for some of their slots at Reagan National Airport in Washington, D.c. and New York City’s LaGuardia, too.

Speaking during Southwest’s third quarter earnings call today, Kelly said he’s “reasonably confident” some of these slots will become available, “and if there is that opportunity, we will certainly take advantage of that bidding.”

There have been rumors that a settlement of the antitrust suit could be taking place, and you can obviously count Kelly as betting that the merger will go through.

“I can’t imagine the merger goes through without divestiture (of slots),” Kelly added.

A combined American and US Airways would control about 67% of the slots at Reagan National (DCA). JetBlue has expressed interest is getting ahold of some of them, and Southwest is waiting in line, too, although Kelly said there is no guarantee that it would be a winning bidder.

Kelly said Southwest would also be interested in bidding on some slots at LaGuardia, which would presumably become available, too.

Mergers, including Southwest-AirTran, American-US Airways and, by implication, United-Continental, were a subtext of Southwest’s discussion of its third quarter results.

In addition to talking about the new American’s slots, Kelly pointed out that although Southwest has a ton of heavy lifting to do in 2014 to complete its integration of AirTran, Southwest is performing well.

Kelly contrasted his airline’s performance with other merged airlines getting distracted and performing poorly. 

Hint, hint: United.

In other news:

• Kelly said Southwest wants to continue to be known as a low-fare carrier, but the airline will “protect the brand” and tinker with it in 2014 and again in 2015. He gave no hint about what the changes would entail, and speculation about whether the airline would drop its “bags fly free” policy will remain in play. Kelly reportedly said Southwest the airline has no plan to add bag fees, but would consider them if passenger prefer an a la carte system.
• Southwest generated $5 million in incremental revenue from its new no-show fee in the third quarter.
• Southwest plans to complete the AirTran integration and launch international destinations in 2014. Seven international routes are candidates for the service, Kelly said, although Bermuda, which didn’t meet Southwest’s performance requirements, won’t be one of them.