United to write off $264 million as Newark landing slots lose value
(Reuters) - United Continental Holdings Inc warned on Tuesday it expects to write off a quarter billion dollars in assets because a U.S. regulatory decision allowing more take-offs and landings in Newark, New Jersey, diminished the value of the airlines's slots there.
United will record a non-cash charge of $412 million in the second quarter, or $264 million after income taxes, associated with its slots at Newark Liberty International Airport, it said in a regulatory filing. United is Newark's largest airline, scheduling nearly three quarters of its flights.
The charge follows a decision by the U.S. Federal Aviation (FAA) Administration to allow more flights beginning Oct. 30 at Newark - currently capped at 81 aircraft movements per hour - because congestion had eased.
United has said the move may cause crowding and delays. The FAA ruling also prompted United to scrap plans to lease 24 additional Newark slots from Delta Air Lines Inc - a deal that the U.S. Justice Department had opposed on the grounds it would strengthen United's grip on the airport and lead to higher fares.
In the filing, United said its existing Newark slots were used as part of the collateral on loans under a 2013 credit agreement and its credit card marketing deal with Chase Bank USA. Those agreements have since been revised with no extra collateral required, the airline said.
United, the No.3 U.S. carrier by passenger traffic, expects total special charges of $278 million after income taxes for the second quarter - equaling about 23 percent of its income in the same period a year ago.
The airline's shares were little changed in after-hours trading.
(Reporting by Jeffrey Dastin in San Francisco; Editing by Sandra Maler and Jeffrey Hodgson)
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