United Airlines CEO confirms he approached American about potential merger, but was rebuffed
United Airlines' CEO confirmed Monday that he approached rival American Airlines about a potential merger — his first public acknowledgment of his proposal — saying it would benefit travelers despite American’s refusal to engage in talks.
“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,” Scott Kirby wrote in a statement released Monday. “I was hoping to pitch that story to American, but they declined to engage and instead responded by publicly closing the door.”
Kirby's confirmation comes after weeks of public speculation about a potential merger between two of the biggest U.S. airlines, amid rising jet fuel prices tied to the Iran war and reports that he had approached the White House about the idea. Kirby said Monday that he had approached American directly about a tie-up, but it's unclear whether that was before or after his White House meeting.
American publicly shot down the idea of a merger, saying in an April 17 statement that it “is not engaged with or interested in any discussions regarding a merger with United Airlines.” 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 statement Monday, Kirby, who previously served as president of American Airlines, argued that merging the carriers would expand service, create a more globally competitive airline and boost the U.S. economy by creating jobs and strengthening the aircraft manufacturing sector.
The rivalry between United and American has played out for years in pricing battles and disputes over gate access at major hubs like Chicago’s O’Hare International Airport, where both airlines have fought to expand their footprint.
Amid that competition, the Federal Aviation Administration this month ordered about 300 daily flights cut from peak summer schedules at O'Hare, saying planned increases by both carriers risked overwhelming an airport already plagued by severe delays.
The order will take effect June 2, later than initially planned, after the FAA said last week it wanted to give airlines additional time to adjust their schedules.
Shares of Chicago-based United fell 1.2% on Monday, to $91.90. They are down about 18% this year amid the Iran war, which began in late February and has driven fuel prices sharply higher. American shares were down about 3.5% on Monday, to $11.68. American is down nearly 24% for the year.
Jet fuel is typically one of the largest expenses for airlines, leaving them especially vulnerable to price spikes and supply shocks.
In some markets, the price of jet fuel has more than doubled as fighting near the Strait of Hormuz squeezes global supplies, raising operating costs for airlines. In response, carriers around the world have raised fares and fees, with both United and American among the major U.S. airlines that have raised checked baggage fees.
