Newly formed American Airlines Group Inc. (AAL - Analyst Report) has gained ownership right of 12 pairs of take-off and landing slots at New York’s John F. Kennedy International Airport (JFK) in a swap deal with JetBlue Airways Corp. (JBLU - Analyst Report).
In exchange, JetBlue won the right for 16 slots at Reagan National Airport (DCA), which is currently being leased from American Airlines. Notably, both the carriers have been leasing the slots to each other since 2010.
In Jan 2014, Southwest Airlines Co. (LUV - Analyst Report) won bids to purchase 54 take-off and landing slots, while JetBlue won 40 such slots, including the above mentioned 16 at DCA. However, the financial details of the deal were not disclosed and are subject to final approval by the U.S. justice department. In Dec 2013, Southwest acquired 22 take-off and landing slots while Virgin America won 12 such slots at New York’s La Guardia airport (LGA).
The slot divestment is part of the mega merger between American Airlines and U.S. Airways Group Inc. which required the carriers to give up 52 take-off and landing slots at DCA and 17 pairs at LGA. Further, the carriers have to divest two gates and related facilities at each of the Boston, Chicago, Dallas, Los Angeles and Miami airports.
JFK is one of the busiest national and international hubs, with passengers flying from all major destinations in the world. We thus believe that the slot purchase augments American Airlines’ presence in JFK – an airport, which faces flight access restriction to reduce congestion. Additionally, American Airlines will also fortify against rival Delta Airlines Inc. (DAL - Analyst Report) in New York, where it has a strong foothold.
American Airlines currently carries a Zacks Rank #1 (Strong Buy).