United Shares Objectives of Proposed Merger With American

Could we see further consolidation among the largest U.S. airlines?

Travel industry professionals and the traveling public alike have grown accustomed in recent years to hearing airline spin on the benefits of proposed mergers involving the likes of Spirit, Frontier and JetBlue. Much more time had passed, however, since there was public discussion of consolidation around the largest airlines — possibly not since Continental and United merged (2012) or U.S. Air merged with American Airlines (2013). That all changed two weeks ago, when it was revealed that United CEO Scott Kirby had proposed a United-American merger in a meeting with President Trump.

American Airlines responded with a public statement just a few days after that information was reported, noting that was not an arranged marriage they had any interest in.

"American Airlines is not engaged with or interested in any discussions regarding a merger with United Airlines," the statement read. "While changes in the broader airline marketplace may be necessary, a combination with United would be negative for competition and for consumers, and therefore inconsistent with our understanding of the administration’s philosophy toward the industry and principles of antitrust law."

United's Kirby details what could have been

Today United CEO Scott Kirby issued a follow-up press release offering further explanation about United's intentions and letting American Airlines know, publicly, just what it is they're missing out on.

"I thought we could do something incredible for customers together," Kirby wrote. "I always knew that the only way any merger could be successful (and approved) is if it was great for customers and with a willing partner that shared my big, bold vision. 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."

First, Kirby sought to dispel any notion that United was dealing with any serious financial challenges. "In the past, airline mergers usually have been about two struggling airlines coming together to cut costs, flights and headcount," he acknowledged. "My aspirations could not be more different. The bold idea I wanted to pursue was about growth that would usher in a brand new era of leadership by U.S. aviation."

Next, Kirby went on to detail the benefits American would be missing out on: to create an airline that customers could fly to even more places, to create more value by investing in a joint product, to be able to compete more effectively on the global stage, and to boost the U.S. economy by creating more jobs and supporting U.S. aircraft manufacturing.

Testing the waters

"Since previous mergers have been about saving struggling airlines, previous legal and regulatory reviews have always focused on subtraction and what's being lost," Kirby noted. "But, a different kind of merger proposal — one that's focused on growth, customer investments and global competitiveness — would have been a different proposition altogether."

Although Kirby's statement begins its concluding paragraph with "While our pursuit of talks with American have ended," the nature of the statement itself would imply that United would love nothing more than to discuss the topic further. At the very least it's a public attempt to test the regulatory attitudes and limits of the current administration, as well as to cultivate demand in the public sphere.