United Airlines Holdings Inc. Chief Executive Scott Kirby has floated a possible combination with American Airlines Group Inc., pitching the idea to senior government officials as higher fuel costs and industry upheaval revive talk of consolidation.
It is unclear whether any overtures have followed or whether any formal process is underway, but a tie-up between the two carriers would instantly reshape US aviation. United and American are among the top four US carriers, and together they control more than a third of the market, which would make a combined airline the largest in the world. The idea would also invite serious antitrust scrutiny and almost certainly a backlash from consumers, politicians and rival airlines.
Kirby, who once worked at American, was previously president of the carrier before leaving after it became clear he did not have a path to the chief executive job there. He joined United as president in 2016 before rising to the top job, and the two airlines have spent years locked in a contest over market share, especially at Chicago’s O’Hare International Airport, where they have fought over gates and traffic. Kirby has also criticized American for moving too slowly to add more premium products.
The renewed talk comes as rising oil and fuel prices, driven by the US-Iran war and the effective closure of the Strait of Hormuz, squeeze the industry. Kirby told employees in a memo last month that United would benefit from any shakeout, and he said on March 24 in Los Angeles that the carrier would be there to pick up some of those assets, adding that there were lots of rumors about buying entire companies. He also said United had already taken some capacity out of the market.
Any merger would still need approval from the Transportation Department and the Justice Department, and Transportation Secretary Sean Duffy said on April 7 that the government would look at competition and ticket prices before blessing any airline tie-up. Duffy said President Trump loves to see big deals happen and that there is room for some mergers in aviation, but he also said he would not pre-commit to anything and warned that larger airlines would likely have to peel off some assets. That leaves the big question unchanged: whether Kirby is testing the political weather for a deal, or whether he is simply signaling that United is ready if rivals start to wobble.