United Airlines CEO Scott Kirby on Monday outlined why he thinks a merger between his airline and rival American would benefit travelers, despite American's refusal to engage in negotiations and concerns that such a combination would harm competition and raise consumer prices.
"I was confident that this combination, which would have been about adding and not subtracting, creating a truly great airline that customers love, could get regulatory approval," Kirby wrote in a press release. "I was hoping to pitch that story to American, but they declined to engage and instead responded by publicly closing the door."
The stocks of both airlines soared two weeks ago when reports surfaced that Kirby had floated the idea of combining two of the biggest U.S. airlines to the White House. Kirby said Monday that he had approached American directly about a tie-up, but it's unclear whether that was before or after the White House meeting.
Competition and Consumer Impact
Days after the meeting in Washington, American shot down the idea of a merger. "American Airlines is not engaged with or interested in any discussions regarding a merger with United Airlines," the company said in an April 17 press release. Additionally, a combination of the two carriers "would be negative for competition and for consumers" and possibly raise antitrust concerns, the company said.
Fort Worth, Texas-based American Airlines is itself the product of a 2013 merger with US Airways Group. President Donald Trump also said last week that he was against a merger of the airlines.
In his press release Monday, Kirby argued that a merger between the iconic airlines would expand service, create a globally competitive airline and boost the U.S. economy by creating millions of jobs and strengthening the aircraft manufacturing sector. However, American's response highlighted the potential negative consequences for competition and consumers that regulatory authorities would likely scrutinize.
Market Response and Economic Context
Shares of Chicago-based United shares fell 1.4% on Monday, to $91.72. They are down about 20% since the war in Iran began in late February, sending fuel prices soaring. American shares were down 2% in morning trading Monday, to $11.84. American is down about 15% since the war began.
The stock declines reflect broader economic pressures facing the airline industry, including rising fuel costs that disproportionately affect travelers through higher ticket prices. The proposed merger comes at a time when both airlines are experiencing significant financial strain, raising questions about whether consolidation would protect jobs and service or lead to reduced competition that could harm consumers through higher fares and fewer choices.
Regulatory and Political Opposition
The merger proposal faces opposition from multiple fronts. American Airlines explicitly cited antitrust concerns in its rejection, noting that combining two of the nation's largest carriers would likely reduce competition in the industry. President Trump's stated opposition adds another obstacle to any potential deal, suggesting that political and regulatory approval would be difficult to obtain even if both companies were interested.
The history of airline mergers, including American's own 2013 combination with US Airways Group, provides a backdrop for evaluating claims about consumer benefits. Industry consolidation has historically led to reduced competition in many markets, with fewer airlines controlling larger shares of routes and potentially limiting consumer choices while raising prices.
Why This Matters:
The proposed merger between United and American Airlines raises fundamental questions about market concentration and consumer protection in an industry that has already undergone significant consolidation. When major airlines combine, the reduction in competition can lead to higher ticket prices, fewer route options, and reduced service quality for travelers who have limited alternatives. American Airlines' explicit warning that the merger "would be negative for competition and for consumers" reflects concerns that industry consolidation prioritizes corporate interests over passenger welfare. The economic context of rising fuel costs and declining stock values—with United down 20% and American down 15% since the war in Iran began in late February—suggests that merger discussions may be driven more by financial pressures than by genuine service improvements. Regulatory oversight of airline mergers serves to protect consumers from monopolistic practices and ensure that market forces continue to incentivize competitive pricing and quality service, rather than allowing a few dominant carriers to control the industry without meaningful accountability to travelers.