NEW YORK, FEB. 5 -- United and Northwest Airlines emerged today as competitors to replace Eastern Air Lines as a major carrier at Washington National Airport, but the winner of that contest may ultimately be determined by the Justice Department.
Northwest thought it had secured a deal last month to acquire Eastern's landing and departure rights at the Washington airport. But United topped Northwest's offer in an auction of Eastern assets that started Monday and dragged on until 3 a.m. this morning.
United offered Eastern $35.5 million for its 67 "slots" at National airport, only slightly more than the $35.25 million that Northwest was willing to pay -- a bid which Northwest says has fewer strings attached.
The final arbiter may well be the Justice Department, which will complete its review of the proposed transactions Feb. 15.
Although Justice Department attorney Mary Jean Moltembrey would not comment on the agency's concerns, sources said a critical factor will be the impact on competition in Washington and other markets.
For United, the acquisition of the slots at National would strengthen its already considerable role as a carrier in the Washington area, where it already dominates Washington Dulles International Airport. United provides both transcontinental and international service out of Dulles, making it one of the carrier's major hubs.
"National would be a different market for us," said UAL Corp. senior vice president Lawrence Nagin. Right now United serves only Chicago out of National. With the additional slots it stands to buy from Eastern, it could compete more directly for shorter trips.
United has a total of 135 flights a day out of the Washington area; Northwest's presence is considerably smaller. The Washington area is also one of several locations that United has considered for a maintenance base, although it wasn't clear whether the proposed transaction would have an impact on that decision.
Either carrier will present a new challenge to USAir. With 236 daily jet departures out of the area, USAir is the largest carrier serving Washington -- it not only has a large hub at Baltimore-Washington International Airport, but it also is the dominant carrier out of National.
Whoever wins, Delta Air Lines will walk away with nine slots at National, which it picked up for $5.4 million. In fact, Delta emerged as the biggest buyer at the auction, offering more than $135 million for a variety of assets, including 18 airport gates at Atlanta's Hartsfield Airport.
The bankruptcy court approved the transaction after Eastern's court-appointed trustee, Martin R. Shugrue Jr., told the court that no other bidder had emerged for the Atlanta assets.
Continental Airlines, itself in bankruptcy proceedings, made the top bid for Eastern's terminal and landing facilities at New York's LaGuardia Airport.
The judge overseeing Continental's bankruptcy must approve that transaction, or the assets could wind up with another carrier.
All told, Eastern's attorneys said the sales could generate some $260 million.
The auction is the denouement of the Eastern bankruptcy, which began March 9, 1989, four days after a strike at the airline virtually shut down the carrier. Two and a half weeks ago, after nearly two years of unsuccessful attempts to reorganize and survive, Eastern shut down again -- this time for good. How much, if anything, Eastern's creditors receive will depend on the outcome of the asset sales.