UPDATE 1-Virgin America says it was awarded Dallas airport gates

(Adds agreement subject to City of Dallas approval)

April 25 (Reuters) - Virgin America said on Friday it would offer new flights from Dallas Love Field after it was awarded two gates at that airport by the U.S. Justice Department.

The carrier said in an emailed statement that the agency approved a gate-transfer agreement it has with American Airlines Group, which is giving up the assets as part of its merger settlement. The agreement is subject to approval of the City of Dallas, and Virgin America said it was confident the city would clear it.

Virgin America, a carrier in which Richard Branson's Virgin Group has a minority stake, said it planned to use the gates to start flights between New York's LaGuardia, Ronald Reagan Washington National, Los Angeles and San Francisco airports and Dallas Love Field in October.

American agreed to give up takeoff and landing rights and gates at various airports to settle a U.S. Justice Department lawsuit that sought to block its merger with US Airways. Southwest Airlines Co, which controls 16 of 20 gates at Dallas Love Field, and Delta Air Lines Inc have also expressed interest in the two Dallas Love Field gates.

In a statement, Delta said designating the two Love Field gates as "common use gates" managed by the City of Dallas was the best option for their use.

"While American was bound by its merger settlement with the Department of Justice to release its gates, any sublease proposed by American must be approved by the City Council," Delta's statement said. "If the City exercises its right to not approve the sublease, the airport can operate them as common use."

Southwest spokesman Brad Hawkins said his company appreciates "the opportunity afforded by the City Council to show how the Southwest plan is best" for the use of the two gates.

Virgin America recently won takeoff and landing rights at New York's LaGuardia Airport and Ronald Reagan Washington National Airport that American Airlines divested.

Virgin America plans to move its current operations at Dallas Fort Worth Airport to Dallas Love Field should it obtain the gates.

(Reporting by Karen Jacobs in Atlanta; editing by Andrea Ricci and Matthew Lewis)