United Airlines CEO reportedly pitched merger with American, sparking competition fears | Business
United Airlines CEO is said to have proposed a blockbuster merger with American Airlines during a meeting with Donald Trump, floating the combination of the world’s two largest carriers.
According to Reuters, based on two unnamed sources, United head Scott Kirby brought up this possibility in his meeting with the US president in late February. Such a deal would overhaul the global air travel industry and likely face intense antitrust scrutiny.
United declined to comment. America and the White House did not immediately respond to requests for comment.
Including international flights, United and American were the world’s two largest airlines by available capacity last year, according to aviation data group OAG.
United shares rose 3.9% in early trading in New York on Tuesday. America’s shares rose 9.3 percent.
A combination between the two carriers would be the biggest consolidation move in the airline industry in at least a decade, combining the U.S. industry’s “big four” (United, American, Delta and Southwest) into the “big three” that currently collectively control 74% of passenger capacity.
It’s unclear how Trump responded to Kirby’s offer. A merger between United and American would likely face fierce opposition from unions, rival airlines, lawmakers and airports, triggering fears about overlapping routes and job losses.
Critics were quick to warn that such a deal would also have a detrimental impact on passengers.
Ganesh Sitaraman, director of the Vanderbilt Policy Accelerator and author of Why Flying Is Miserable, said: “A potential United-American merger would prove how broken the airline industry is in America and would be an unmitigated disaster for the flying public. Fewer options would mean higher ticket prices, more fees and fewer options for everyone who wants to get from A to B. Even the most lenient antitrust regulator would have to put its foot down on such a blatantly anticompetitive merger.”
But Capt. Dennis Tajer, spokesman for the Allied Pilots Association, a union representing American Airlines’ 16,000 pilots, approached the report with an open mind.
“We have expressed quite publicly our concerns regarding American Airlines’ poor financial, operational and customer service performance under its current management team,” Tajer said. “We are always interested and welcome ideas that will change the course of our airline.”
Sean Duffy suggested there was room for consolidation in the air travel industry but stressed that any deal would be closely scrutinised. “If there was a merger between some of the major airlines, they would have to strip some of their assets,” the US transportation secretary told the CNBC news network last week. “I won’t pre-commit to anything.”
“Who knows who will match?” Duffy added. “Is there room for some mergers in the aviation industry? Yes, I think there is,” he said, acknowledging there had been “a lot of talk” about potential deals.
Reuters contributed reporting
