United Airlines writes off $412 million for Newark slots

United Airlines writes off $412 million for Newark slotsMel Evans, ASSOCIATED PRESS
A United Airlines plane lands Sept. 9, 2015, at Newark Liberty International Airport in Newark, N.J.
United Airlines announced Tuesday it would take a $412 million charge in the second quarter because the strict limit on flights at Newark Liberty International Airport has been removed, rendering its once-valuable landing and takeoff slots worthless.

Slots are a valuable commodity at crowded airports such as New York’s LaGuardia or Washington National because no other airlines can enter those markets without acquiring slots. They have a value because airlines can sell them to each other, allowing them to expand service.
American Airlines said in March, 2014, that it received $381 million for 52 slots at National and 17 at LaGuardia that it had to surrender as part of the Justice Department’s review of its merger with US Airways. United valued its Newark slots at $264 million after taxes.
United is the dominant airline at Newark. The Federal Aviation Administration has long had a cap on slots for takeoffs and landings to limit congestion. But the FAA removed the slots cap in April.
United, Delta drop New York-area slots deal

The FAA decision at Newark already had ramifications for United.
The airline planned to swap 24 slots with Delta Air Lines at New York’s John F. Kennedy airport, which would have allowed each airline to consolidate its presence at each hub. But the airlines dropped the deal after the FAA decision.
Overall, United announced it would write down $434 million in special charges, or $278 million after taxes, for April, May and June when announcing quarterly earnings after the market closes July 19. United had used the Newark slots as collateral for a 2013 credit agreement with Chase Bank, but no replacement collateral was required, the airline said

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