American Airlines down after dismissing United megamerger

American Airlines The stock fell in premarket trading on Monday after talks on a potential megamerger were rejected. United Airlines late last week.

The former US carrier issued a statement on Friday, shortly after markets closed, denying rumors of a potential deal between the two airlines.

“American Airlines is not in any discussions regarding or interested in a merger with United Airlines,” the statement said.

“While changes in the broader airline market are necessary, a merger with United would be adverse to competition and consumers and would therefore be inconsistent with the Administration’s philosophy toward the industry and our understanding of the principles of antitrust law,” he added.

Shares of American last fell nearly 3% in premarket trading, reversing gains made Friday amid a broad rally in the market.

United CEO Scott Kirby had floated a possible merger with rival American with the Trump administration at the White House in February, but the airline appears to have been considering the idea since at least last fall.

“The size will help compete on U.S.-bound flights,” Kirby said on the “Stratechery” podcast in January.

He explained that when customers go to the Middle East, they tend to use the region’s airlines.

“[But] If we get bigger and have more offerings to these customers, we probably…[is] “It makes more sense for them to fly us when they go to the Middle East.”

The merger would create the world’s largest airline; This means this possibility has sparked intense regulatory scrutiny and concerns that it could create a monopoly in the market.

Two carriers together Delta Airlines And Southwest AirlinesIt currently controls approximately 80% of domestic capacity.

The US-US merger would result in the two owning about 40% of domestic shares, according to airline data firm OAG.

“President Trump likes to see big deals happen,” U.S. Transportation Secretary Sean Duffy said on CNBC’s “Power Lunch” earlier this month, adding that there is “room for mergers in the aviation industry.”

But Duffy noted: “If there’s a merger between some of the major airlines, they’re going to have to strip away some of their assets. We don’t want to have such a huge infrastructure in America with one airline, which will impact pricing in the long run because there would be a lack of competition.”

George Hay, a law professor at Cornell University, previously told CNBC: “This would be the biggest of all time. I don’t see even the slightest chance that a court would allow this.”

— Leslie Josephs contributed to this report.