United Airlines' reported talks with U.S. government officials, including President Donald Trump, about its interest in American Airlines could be the first step toward a dramatic reshaping of the U.S. airline landscape, with substantial consequences for corporate travel buyers. But barriers to any consolidation remain high, and the road the carriers would walk to merge would be long and winding.
United CEO Scott Kirby on Feb. 25 allegedly spoke with President Donald Trump and other senior administration officials and pitched a potential merger with American Airlines, according to a Monday Bloomberg report.
United declined to comment on the report. American did not respond to a request for comment.
Kirby, however, in recent years has had much to say about the way American has handled its business. Himself a former president of American, Kirby on earnings calls and at investment conferences has charged American with choosing to focus on managing costs, which "is the opposite of what you do if you're trying to be a brand-loyal airline." He has stated that American has "lost massive market share" in Chicago—where the two carriers are having a capacity race—and where American is "now losing money." He has said United and Delta Air Lines are the only "two brand-loyal airlines."
Would federal regulators approve such a deal? In recent years, they've okayed smaller-scale deals like Alaska Air Group's 2024 acquisition of Hawaiian Airlines, but successfully fought JetBlue's purchase of Spirit Airlines (and JetBlue's Northeast Alliance partnership with American).
Those moves were under the Biden administration, though. How would the Trump administration respond?
U.S. Department of Transportation Secretary Sean Duffy last week on CNBC said "there is room for some mergers in the aviation industry."
Duffy added that there is a "lot of chatter and a lot of different people are talking amongst themselves about what they should look like," he said. "I'm going to wait and see. Is there a deal that sparks the table? How does it look? What impact does it have on competition? What is it going to do for the consumer and the pricing of the consumer? What does it do for us to be competitive globally to make sure that we, in America, have the biggest and the best airlines competing around the world?"
Duffy also said that the agency would look at deals on a case-by-case basis. "If there was going to be a merger between some of the larger airlines, they're going to have to peel off some of their assets," he said. "I think that will affect pricing in the long run, because there'll be a lack of competition."
A New Landscape?
That lack of competition is one reason why Partnership Travel Consulting founder Andrew Menkes is against a proposed United-American deal. "It sounds sexy to be sitting in government and saying we're in favor of mergers," he said. "But you can't be in favor of a merger that creates an oligopoly amongst two airlines. That's bad for the consumer and bad for the industry, and a lot of jobs will be lost."
Menkes added that the U.S. as the market stands already is down to "very few carriers. If you look at market share, four carriers have about 70 percent of the U.S. share," he said, with Delta Air Lines and Southwest Airlines along with American and United.
"If any two of the majors—whether American-Delta, United-Delta or American-United—were to merge, that would severely reduce competition, which by definition increases prices," Menkes said.
What already did rise were the stock prices for the two carriers once the story hit, Menkes noted. United's share price closed at $97.17 on Tuesday, up 2 percent. American's closed up 8 percent to more than $12.
Festive Road CEO Caroline Strachan said in an email that a United-American tie-up would be "not just an acquisition. It's a market structure shift. The two airlines have played different strategic games in the past few years. Supplier management strategies will have to shift."
In addition, "discounts could reduce significantly or worse, a mega-airline could focus on silent yield increases via new revenue management strategies," Strachan said.
Points Path founder and CEO Julian Kheel in an email agreed, noting that "corporate travel managers depend on having multiple major carriers to keep costs in check, and shrinking that pool makes it harder to drive discounts," he said. "If United and American combine, large corporate clients would lose a key negotiating chip, which could easily translate into higher fares and less-attractive corporate contracts."
Kheel added that a combined airline risks reducing schedule options, "which is a major pain point for time-sensitive business travelers. The biggest impact would likely be felt on high-frequency routes, where fewer competing flights would mean less flexibility and higher last-minute prices."
Another consideration is that each carrier belongs to competing airline alliances—United to Star Alliance, American to Oneworld.
"That would be a very difficult puzzle to solve because if they became one airline, they would have to choose between the two alliances," Menkes said. "That affects codeshare, marketing and the most important thing to any travelers, the points in their wallet."
Each carrier also has antitrust-immune joint ventures, notably in the transatlantic market. United has a JV with fellow Star Alliance carriers the Lufthansa Group and Air Canada, while American has a JV with British Airways and other International Airline Group carriers.
For corporate travel buyers with contracts at both United and American, it would be a "legal nightmare," Menkes added. Second, with demand as high as it's been and load factors close to 80 percent, "people have to recognize that on certain days, that means 100 percent."
And then there is Delta. "All of a sudden, this new airline says, 'You will have to move a lot of your business over to me from Delta.' That's another contract for legal to look at," Menkes said.
What do buyers need to do right now? Strachan suggests a "stress test dependency."
"Does this create a supplier concentration headache for your company? What key routes may be exposed to inventory reduction that impacts your employee and business footprint?" she said. "That's what the executives expect you to have an answer for. The rest is in the hands of the regulators, for now."