JetBlue Airways has declared its intention to bid on slots being divested by US Airways and Delta at New York LaGuardia and Washington National airports.
In granting approval for US Airways to transfer 132 slot pairs to Delta at LaGuardia and the transfer of 42 pairs of slots to US Airways by Delta at National, the US Department of Transportation (DOT) required slot pair divestitures to ensure competition at the airports remains robust.
DOT is requiring the divestiture of eight slot pairs at National and 16 at LaGuardia.
A slot pair is one takeoff and one landing slot.
JetBlue chief commercial officer Robin Hayes said during a 26 October earnings call the carrier overall views the slot transaction as a positive development and stressed JetBlue's intent to be an "active bidder" for the divested slots.
Delta executive vice president of network planning and revenue management Glen Hauenstein recently said DOT has started an auction process for the slots that should culminate in the full divestiture by late November.
JetBlue is likely to delve into its cash balances to support is bid on the slots. During the carrier's earnings discussion JetBlue CEO Dave Barger stated that over the years the carrier has stated it aims for cash balances "north of 20% on trailing 12 [months of revenue]" explaining that was prudent given the economic uncertainty and fuel price volatility.
But Barger also stressed a strong balance sheet allows the carrier to be aggressive when it looks at certain assets like slots. "That's what cash is for," he stated.
Analysts at JP Morgan estimate the $1.2 billion in unrestricted cash on JetBlue's balance sheet at the end of the third quarter is about 29% of the carrier's last twelve months of revenues, "far above the low end of our comfort zone" of roughly 15%.