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 to the Trump administration earlier this year, a suggestion that if acted upon, would create the world’s largest airline.

While the Trump administration has appeared more open to mega deals than its predecessors, such a merger would face heavy regulatory scrutiny with the top four airlines (those two carriers, plus Delta Air Lines and Southwest Airlines) already dominating about 80% of domestic capacity. If they combined, American and United would have a roughly 40% domestic share, according to airline data firm OAG.

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

American and United declined to comment on the discussion of a merger, which was reported Monday by Bloomberg. The White House didn’t immediately comment on the reported discussion.

American shares rose 8% Tuesday, but are still down more than 20% since the start of the year. United’s shares rose just over 2%, trimming its losses this year to about 13%.

Seaport Research Partners airline analyst Daniel McKenzie said he attributed the stock move “to short covering rather than the market assigning legitimacy to the merger idea.” He added that the deal would be “be dead on arrival, though politely reviewed until the public backlash became too deafening.”

If the Justice Department “doesn’t object to that, then what would they object to? It is very hard to imagine a deal of that magnitude and concentration going through,” said Samuel Engel, senior vice president at consulting firm ICF.

He said consolidation allows carriers to better control capacity, which in turn can drive up fares, a key consideration generally with antitrust investigations

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

The Trump administration has shown a warmth toward mergers in the industry, however.

“Is there room for some mergers in the aviation industry? Yeah, I think there is,” Transportation Secretary Sean Duffy told CNBC’s Phil LeBeau last week, regarding industry consolidation. Duffy said President Donald Trump “loves to see big deals happen, adding that he would “have to review” a tie-up.

The deals chatter comes as the airline industry is facing a profit-eating surge in jet-fuel costs, airlines’ biggest expense after labor.

Airlines are cutting their capacity plans to save on costs, which could further drive up airfare.

“Over my career, I’ve seen many periods of disruption in this industry. And time and again, high fuel prices have been the most powerful catalyst for change, separating the winners and forcing weaker players to rationalize, consolidate or be eliminated, Delta CEO Ed Bastian said on an earnings call last week. “Delta is navigating from an advantaged position.”

Delta completed its merger with Northwest Airlines in 2008, giving it an advantage over other carriers that completed mergers later. The modern American Airlines is the product of a 2013 combination with US Airways, which was where several current airline executives worked, including both United’s Kirby and American CEO Robert Isom.

Kirby, whom American fired in 2016, has gone head-to-head with his former employer, including in key markets like Chicago.

Delta and United already account for most of the U.S. industry’s profit.

American had fallen behind both airlines as it struggled to capitalize on higher-spending customers who are driving major airlines’ revenue in recent years. American’s net income was $111 million, on sales of $54.6 billion, last year while United reported net income of $3.35 billion, on $59 billion in sales, according to company filings.

The Biden administration challenged two major airline tie-ups, and won. A federal judge knocked down American’s partnership with JetBlue Airways in the Northeast in 2023 and in early 2024, a court ruled against JetBlue’s planned acquisition of Spirit Airlines, which is now in its second bankruptcy.

JetBlue and United formed a partnership that allows customers to book on each other’s airlines but falls short of the schedule coordination under that failed American deal. Kirby has expressed hesitation about taking that deal further.

“I like the partnership with JetBlue,” Kirby said in Boston last month. “I think highly of their team. They’ve got the right DNA and culture, but … we’re doing a great job growing. I feel really good about our standalone.

“Mergers are big and hard and complicated,” he added.