American Airlines jumps on potential merger talks with United
American Airlines was trading up more than 5% in premarket on Tuesday after Bloomberg and Reuters reported that United Airlines CEO Scott Kirby had floated the idea of a possible merger with American Airlines.
According to Reuters, Kirby raised the idea during a February White House meeting with President Trump, though it remains unclear whether United has made any formal approach to American or whether any deal process is underway.
Such a deal would create a true airline giant, combining the world's largest and fourth-largest airlines by capacity, respectively, per OAG data, which together control more than a third of the US market.
With that in mind, any tie-up would very likely face serious antitrust obstacles, with scrutiny from both the Department of Justice and the Department of Transportation. Transportation Secretary Sean Duffy said last week in a CNBC interview that there may be room for mergers in aviation, but warned that any large deal would face close review for its impact on consumers and might require the airlines to divest assets to avoid excessive market share concentration.
The talks come as airlines grapple with higher jet fuel costs driven by the US-Iran war and the effective closure of the Strait of Hormuz. American is also under significant financial pressure, weighed down by heavy debt and weaker profitability relative to peers, while Kirby has recently signaled that United could use industry disruptions to gain assets or market share.
Shares of United Airlines were also up modestly on the news, rising roughly 2% in premarket trading.
Such a deal would create a true airline giant, combining the world's largest and fourth-largest airlines by capacity, respectively, per OAG data, which together control more than a third of the US market.
With that in mind, any tie-up would very likely face serious antitrust obstacles, with scrutiny from both the Department of Justice and the Department of Transportation. Transportation Secretary Sean Duffy said last week in a CNBC interview that there may be room for mergers in aviation, but warned that any large deal would face close review for its impact on consumers and might require the airlines to divest assets to avoid excessive market share concentration.
The talks come as airlines grapple with higher jet fuel costs driven by the US-Iran war and the effective closure of the Strait of Hormuz. American is also under significant financial pressure, weighed down by heavy debt and weaker profitability relative to peers, while Kirby has recently signaled that United could use industry disruptions to gain assets or market share.
Shares of United Airlines were also up modestly on the news, rising roughly 2% in premarket trading.
