An American Airlines aircraft flies past the tail of a United Airlines aircraft as it lands at Reagan National Airport in Arlington, Virginia in January, 2022.Joshua Roberts/Reuters
A potential deal between United Airlines UAL-Q and American Airlines AAL-Q would create an industry behemoth and invite extraordinary scrutiny from regulators, labour unions and consumer advocates, all wary of higher fares and reduced competition. United Airlines CEO Scott Kirby pitched a potential merger of the two carriers to U.S. President Donald Trump in late February, according to two sources familiar with the matter, but industry officials were quick to highlight the formidable antitrust obstacles such a deal would face.
The details of Kirby’s proposal were not immediately clear. United declined to comment on the antitrust implications of a potential merger.
Industry experts were quick to cast doubt on the chances of such a deal. “This seems hopeless to me. There are huge overlaps on a number of routes and in various metropolitan areas (such as Chicago). No amount of divestitures would fix it,” said William Kovacic, director of the competition law centre at George Washington University.
A combined airline would account for roughly 40 per cent of U.S. domestic flying capacity based on 2025 schedules, underscoring the scale of the antitrust challenge.
American’s shares rose 8 per cent, while United gained around 3 per cent. Seaport analysts said the move was likely driven by short-covering rather than confidence the deal will materialize, describing the idea as a long-shot revival of a merger concept first floated nearly two decades ago.
Valuation presents another hurdle. TD Cowen analyst Tom Fitzgerald said American would likely argue for a price above US$20 a share based on its US$14-billion in unencumbered assets. But he questioned whether that valuation is realistic, given the added debt burden for United. American was trading around US$12.
Even before divestitures, the combined airline would be dominant, controlling at least half of domestic capacity at 159 airports, Fitzgerald said.
Some investors say the ripple effects could reshape the industry. One JetBlue Airways investor, who spoke on condition of anonymity, said the carrier could be left with little choice but to seek a buyer if such a deal were approved.
“United is doing a Trump-style negotiation – start with a big ask, then concede a little. If it is a no on American, then it will be a yes on JetBlue,” the investor added. JetBlue did not respond to a request for comment.
United Airlines CEO Kirby pitched American Airlines tie-up in meeting with Trump, sources say
Scrutiny could also come from states, competitors and consumer groups, reflecting a tougher stance on large mergers. The Biden administration blocked JetBlue’s attempt to acquire Spirit Airlines, arguing it would eliminate a low-cost competitor.
A state coalition recently sued to unwind Nexstar’s acquisition of rival broadcast station owner Tegna. Competitors or even customers can also sue to block deals.
Spokespeople for the attorneys general in Illinois, where United is based, and Texas, where American is headquartered, did not immediately respond to requests for comment.
Lawmakers have also raised concerns about consolidation. Sen. Mike Lee, who leads the Senate antitrust subcommittee, has held hearings on airline competition, where critics said consolidation has reduced price competition.
Industry group Airlines for America has countered that past mergers lowered costs and expanded connectivity, citing data showing airfares fell 1.5 per cent between 2019 and 2024 even as overall consumer prices rose 23 per cent.
But consumer advocates see consolidation as hurting travellers. Data shows American, Delta and United have stopped competing on price, William McGee, a fellow at the American Economic Liberties Project, said at the hearing.
For United, a deal of this scale could provide the step-change in capacity and market share it would need to establish a clear lead over rival Delta, which has long dominated the industry in profitability and premium revenue.
“A United-American deal would reduce the ’Big 4′ to a ’Big 3′ with one dominant player. There would likely be competitive issues in many city-pair routes and hubs,” said antitrust lawyer Andre Barlow with DBM Law Group.
“I am not sure this deal can get done. The Trump administration is concerned about affordability issues and this deal would reduce choices and give the airlines more pricing power, which means higher fees for consumers so I would think this would get a rigorous review,” Barlow added.
The merger pitch comes as airlines face rising fuel costs following the U.S.-Israeli conflict with Iran. Since late February, American shares have fallen 14.1 per cent and United 10.4 per cent.
Airlines warn sustained high fuel prices could squeeze margins, curb capacity growth and increase pressure on weaker carriers.
Kirby raised the idea during a Feb. 25 White House meeting, arguing a combined airline would be better positioned to compete internationally against foreign carriers.