Eastern to Sell Its Gates in Philadelphia

Strikebound Eastern Airlines today announced it has agreed to sell its eight Philadelphia airport gates and other assets to Midway Airlines for $206 million.

Eastern announced the move in a federal bankruptcy court hearing on an earlier agreement under which it would have sold the Philadelphia gates and two U.S.-Canadian routes to USAir Group Inc.

Eastern asked U.S. Bankruptcy Judge Burton R. Lifland for permission to terminate its agreement with Washington-based USAir and to replace it with the accord with Chicago-based Midway.

The Justice Department recently said it planned to file an antitrust suit blocking the $85-million proposed sale to USAir of Eastern’s airport gates in Philadelphia and its Philadelphia-Toronto and Philadelphia-Montreal routes.

Michael Boudin, acting antitrust chief for the Justice Department, had said the sale to USAir “threatens to lessen competition” in airline service between Philadelphia and other cities.

The state of Pennsylvania also challenged the proposed USAir purchase, saying the transaction could lead to higher ticket prices.

USAir already has nearly one third of the flights into and out of Philadelphia.

Bruce Zirinsky, an attorney for Eastern, said the airline held negotiations with Midway officials through Thursday night and into this morning.

Under their new agreement, he said, Midway would purchase all eight Philadelphia gates, the two Canadian routes, two landing slots at New York’s LaGuardia Airport, two slots at Washington National Airport, and 16 McDonnell Douglas DC-9 aircraft.