Delta Nears JFK Deal
By MIKE ESTERL


Delta Air Lines Inc. is poised to get the green light for a $1.2 billion overhaul of its outdated terminals at New York's John F. Kennedy International Airport, according to people familiar with the matter.


The board of the Port Authority of New York and New Jersey plans to vote on the massive project on Thursday, these people added.


Delta, the largest U.S. airline, has been in talks with the Port Authority for years in a bid to upgrade its facilities at JFK and capture a bigger share of the biggest U.S, air-travel market.


The JFK construction project coincides with a sharp rebound in the U.S. airline industry after the recession sent traffic plunging last year and an increasingly heated battle for Manhattan's lucrative business-travel market.


Several airlines are vying for the upper hand over New York skies. Delta is trying to narrow the gap with area leader Continental Airlines Inc., which operates out of Newark Liberty International Airport in New Jersey. Continental and Delta also are trying to fend off AMR Corp.'s American Airlines and JetBlue Airways Corp., two other major players in New York.


American and JetBlue have completed major terminal overhauls at JFK in recent years. Delta's facilities, by contrast, date back about half a century and company executives have described them as the worst the carrier operates in the U.S.


Under the plan, Delta would move out of JFK's Terminal 3, the iconic but beaten-down former Pan Am Worldport, and relocate to an expanded Terminal 4. Delta also would continue to fly out of Terminal 2.


Construction on an expanded Terminal 4 would begin this autumn and be completed by mid-2013, according to people familiar with the plan. Terminal 3 would be demolished and the site would be used for additional parking, they added.


The project would be financed with some mix of special project bonds backed by the lease on the new terminal and passenger financing charges, people familiar with the matter said.

Heightening competition, American Airlines and JetBlue joined forces in a limited partnership targeting the New York market earlier this summer. Under the agreement, American and JetBlue offer customers ``interline'' service that allows one-stop booking and check-in, as well as automatic bag transfers, on some connecting flights.


Delta also has been trying to expand its presence at New York's LaGuardia Airport, which serves mostly domestic flights. But those efforts hit a roadblock after U.S. regulators thwarted a plan earlier this year under which Delta would have traded some of its slots at Ronald Reagan Washington International Airport for LaGuardia slots befrom US Airways Group Inc.


—Sean Gardiner contributed to this article.


Write to Mike Esterl at mike.esterl@wsj.com