AirTran, Continental swapping slots at 3 airports

ATLANTA — Discount carrier AirTran Airways plans to stop flying to and from Newark, N.J., and will give its takeoff and landing slots there to Continental Airlines in exchange for Continental slots at airports in Washington and New York, where AirTran faces increased competition from Southwest Airlines, officials said.

An AirTran executive told employees in a memo Tuesday obtained by The Associated Press that the carrier’s decision to cease operations effective Oct. 25 at Newark-Liberty International Airport will allow it to expand its operations at Washington Reagan National Airport and New York’s LaGuardia Airport.

Southwest began flying to LaGuardia in June and would gain entry to National Airport in Washington if its $170 million bid to buy the parent of Frontier Airlines succeeds. A bankruptcy court auction to sell Frontier is set for Thursday.

The swap is for slots only, and no money is expected to change hands, according to two people familiar with the deal who spoke to AP on condition of anonymity because details have not been publicly released.

The officials said that AirTran will give its 10 slots, its single gate and a jetway at Newark to Continental. In exchange, the people said, Continental will give AirTran four slots at LaGuardia and six slots at the Washington airport.

Continental spokeswoman Mary Clark declined to comment.

Low-cost carrier AirTran, a unit of Orlando, Fla.-based AirTran Holdings Inc., plans to add new service to Indianapolis from LaGuardia as a result of its slot pickup from Houston-based Continental Airlines Inc.

AirTran’s departure from Newark will come after serving the market for 10 years.

Kevin Healy, senior vice president of marketing and planning for AirTran, said in a memo Tuesday to employees that the carrier’s employees at the Newark airport will have the opportunity to work at other airports once AirTran ceases operations at Newark.

“Consolidating our operations at both Reagan National and New York’s LaGuardia creates a much more efficient operation and also significantly improves our presence in both of these leading airports,” Healy said.

AirTran said the new flights it will add will better connect important markets in the Midwest and South to business and government centers and play an important role in its overall network structure.

Southwest’s increased bid Monday to take Frontier out of bankruptcy protection is well above the $108.8 million offered by regional jet operator Republic Airways Holdings Inc.

Buying Frontier would give Southwest service in several new cities and take out one of its two big competitors in Denver.

Southwest has said it would keep all of Frontier’s current markets, including Atlanta, one of the last big markets where Southwest doesn’t currently fly. It would phase out Frontier’s Airbus fleet in favor of Southwest’s fleet of Boeing 737s over about two years.

A bankruptcy judge had already approved Republic’s bid. But the bankruptcy process allows other bidders to step forward. That’s what Dallas-based Southwest Airlines Co. did on July 30, initially offering a nonbinding bid of $113.6 million. That was basically a placeholder to give it the chance to look at Frontier’s books and decide whether it wanted to submit a binding bid.

Denver-based Frontier has been operating under Chapter 11 protection since April 2008.