What a United-American merger would mean, from antitrust hurdles to airfare

United Airlines CEO Scott Kirby reportedly floated the idea of ​​a potential tie-up with rival American Airlines At the beginning of this year, the Trump administration came up with a proposal that, if taken into action, would create the world’s largest airline.

While the Trump administration appears more open to megadeals than its predecessors, such a merger would face intense regulatory scrutiny from the four largest airlines (plus those two carriers). Delta Airlines And Southwest Airlines) It currently controls approximately 80% of domestic capacity. If they merge, American and United’s domestic share would be roughly 40%, according to airline data firm OAG.

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

American and United declined to comment on the merger controversy, which was reported Monday. Bloomberg. The White House did not immediately comment on the reported altercation.

American stocks rose 9% on Tuesday morning. Seaport Research Partners airline analyst Daniel McKenzie said he attributed the move to “short coverage rather than the market assigning legitimacy to the merger idea.”

He added that the deal “will be void on arrival but will be politely reviewed until the public outcry becomes too deafening.”

“If the Department of Justice doesn’t object to this, then what will they object to? It’s very hard to imagine a deal of this size and concentration happening,” said Samuel Engel, senior vice president of consulting firm ICF.

Consolidation allows carriers to better control capacity, which can increase fees, often a key consideration in antitrust investigations, he said.

The American-United merger would likely require significant divestitures on routes where the merger of two carriers would mean only one or two airlines would serve that route, said TD Cowen airline analyst Tom Fitzgerald, who said 289 routes now fit that criteria.

However, the Trump administration is positive about mergers in the sector.

“Is there room for some mergers in the aviation industry? Yes, I think there is,” Transportation Secretary Sean Duffy told CNBC’s Phil LeBeau last week regarding industry consolidation. President Donald Trump “likes to see big deals get done,” Duffy said, adding that a bond should be “reviewed.”

Delta and United already account for most of the US industry’s profits.

America had lagged behind both airlines in recent years as it struggled to tap into the high-spending customers that have driven the major airlines’ revenue. Kirby, who was fired by the Americans in 2016, has faced off against his former employer, including in key markets like Chicago.

The Biden administration challenged two major airlines and won. A federal judge ends America’s partnership with the United States JetBlue Airlines In the Northeast, a court in 2023 and early 2024 ruled against JetBlue’s planned acquisition of Spirit Airlines, which is currently in its second stage of bankruptcy.

JetBlue and United formed a partnership that allowed customers to book on each other’s airlines, but left schedule coordination under the failed American deal insufficient. Kirby expressed hesitation about taking this agreement further.

“I love the partnership with JetBlue,” Kirby said in Boston last month. “I think very positively about their team. They have the right DNA and culture, but… we’re doing a great job of growing. I feel really good about us working independently.”

“Mergers are big, difficult and complex,” he added.