According to people familiar with the matter, United Airlines CEO Scott Kirby has proposed a merger with American Airlines Group to multiple U.S. government officials. The merger of two major U.S. airlines would be one of the most far-reaching consolidation moves since the end of the last wave of mergers and acquisitions in the U.S. airline industry more than a decade ago, further intensifying competition in a domestic market already dominated by four airlines of roughly equal size.
As the cost of jet fuel continues to rise, U.S. Transportation Secretary Sean Duffy has hinted at approving possible mergers among U.S. airlines in a recent interview, saying Trump "would love to see big deals happen."
The potential merger also has the potential to reshape the competitive landscape in key hubs such as Chicago and Dallas, especially at a time when fuel costs are rising and the gap between powerful and weak airlines is widening.
However, it is unclear whether United has formally made an offer to American Airlines or whether the two parties are moving forward with the acquisition process. The sources spoke on condition of anonymity because the negotiations have not been made public.
American Airlines shares rose more than 5% in after-hours trading on the news, while United shares were little changed.
In terms of market value, American Airlines is the smallest of the four major U.S. airlines, with a market value of only US$7 billion, while United Airlines has a market value of US$31 billion, Southwest Airlines has a market value of US$19 billion, and Delta Air Lines has a market value of US$44 billion.