All signs point to “no” on a hypothetical United–American merger, but speculation is mounting on whether a different airline deal may take its place.
United Airlines CEO Scott Kirby raised eyebrows when he suggested his company buy American Airlines in a private February meeting with President Donald Trump, who has dismissed the idea since reports on the floated deal surfaced two weeks ago.
Experts in the aviation industry seem to think JetBlue Airways may be a likely player in the mergers and acquisitions game.
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“By floating a massive, controversial merger, Kirby may be positioning for the United-JetBlue acquisition, which would look much more reasonable to regulators than United-American,” Dr. Brandon Parsons, an economics practitioner at Pepperdine University’s Graziadio Business School, told the Washington Examiner.
“This is a behavioral economics technique of anchoring and framing,” he said. “For instance, a $30 hamburger [United-JetBlue] looks cheap next to a $100 steak [United-American]. If the $30 hamburger is presented on its own, without comparison, it looks expensive.”
Antitrust hurdles facing United-American merger
If United and American combined, the transaction would pose major antitrust risks as expressed by the White House and Congress last week.
Speaking on CNBC’s Squawk Box, Trump said he does not want to see United join its business with American because he’s concerned they would become “lazy.” He also bemoaned the fact that there are only a handful of airline carriers now compared to the past few decades.
In a bipartisan letter to Kirby and American CEO Robert Isom, Sens. Elizabeth Warren (D-MA) and Mike Lee (R-UT) explained how the proposed merger would raise ticket prices, cut flight routes, and further reduce competition “in an industry already plagued by a lack of competition.”
There are some positive aspects to such a merger, though.
A strong case for the merger relies on cost synergies and operational efficiencies, meaning both companies would save money by eliminating redundant staff and consolidating facilities. International travel also plays a factor in this hypothetical scenario in which the two leading U.S. airlines would be better equipped to compete with foreign carriers on overseas flights.
However, the benefits do not outweigh the risks when the combined entity would account for 33%-40% of the domestic air travel market.
“In my view, it would face nearly insurmountable antitrust hurdles even under a deal-friendly administration,” Parsons said. “It may be that the ‘true’ target is JetBlue.”
The case for JetBlue
Dr. Rico Merkert, a professor at the University of Sydney’s Business School, concurs that JetBlue may be in a more prime position to join forces with another airline.
“If history is of any guidance and if the current jet fuel crisis due to the events around the Strait of Hormuz is not resolved swiftly, JetBlue could be in play for some M&A activity in search of options due to profitability pressures,” he told the Washington Examiner.
JetBlue is reportedly exploring merger options with United, Alaska Airlines, and Southwest Airlines.
Merkert said mergers between large U.S. carriers have historically been approved to avoid Chapter 11 bankruptcy for one of the merging companies, although that wasn’t the result for Spirit Airlines.
Spirit is currently navigating the Chapter 11 bankruptcy process after its proposed merger with JetBlue failed on antitrust grounds in 2024 due to the anti-monopoly Biden administration. Spirit has been trying to recover since then.
Based on the president’s recent comments, it looks increasingly likely that the Trump administration will step in to bail out the struggling low-cost airline with a $500 million loan. Negotiations are reportedly underway for a federal solution to save the bankrupt carrier.
JetBlue is not facing immediate bankruptcy yet, but its business is being threatened by surging fuel costs due to the Iran war, as is the case with other airlines. Last month, JetBlue raised its checked bag fees to counteract the economic pressures stemming from the military conflict.
JetBlue “may be forced to merge with another carrier,” Merkert said, if higher inflation causes an increase in interest rates. As a result, the company’s financial situation would worsen.
Is there a path forward for a United-American combination?
When asked whether the United-American merger could obtain regulatory approval if a counterbalance airline merger materializes, Merkert shot down the theory that such a scenario could level the playing field in an industry already dominated by high market concentration.
The top four U.S. airlines — American, Delta Air Lines, Southwest, and United — control up to 80% of the domestic market, so two airline mergers would further increase the Herfindahl-Hirschman Index. Or as Merkert put it, “Two wrongs don’t make a right.”
“A counter-balance merger doesn’t automatically fix the competition loss from the first,” he said. “If anything, two mega-deals could push concentration even higher — making approval harder, not easier.”
The HHI, used to measure market concentration, indicates that the domestic airline market has a score of over 2,000 points. The Department of Justice considers any market that exceeds 1,800 points to be highly concentrated. Combined airlines with larger market shares, such as United-American, would push the HHI score to an unprecedented limit.
Regardless of the extreme antitrust risks, the United-American proposition has little to no chance of passing the regulatory process. Not to mention American is opposed to the long-shot deal itself.
“American’s got a strong business plan, and I just want to say that merging the world’s two largest airlines together, that was a nonstarter from the get-go,” Isom told CNBC. “We take any inquiry seriously, but at the end of the day, there’s no way to view that as anything but anticompetitive, bad for customers, ultimately bad for American Airlines, bad for our team. So we’re not pursuing any talks.”
Does United have its eyes on JetBlue?
Some aviation industry experts speculate that Kirby proposed the merger to get back at American for effectively firing him in 2016. At the time, Kirby served as American’s president. On the same day that he was replaced by Isom at American, United announced its hiring of Kirby as president. Less than four years later, Kirby became the United CEO.
While there is an element of personal drama there, Parsons believes that didn’t motivate Kirby to propose the merger.
“Kirby is known for being a data-driven strategist,” the economics professor said. “If he is floating this, it is more likely an attempt to test the regulatory temperature. He likely has his eye on another airline that would create less regulatory scrutiny.”
JetBlue would likely fit the bill. It’s probable the carrier could secure approval from federal regulators, considering it only takes up about 5% of the domestic airline market. It just remains to be seen whether it pursues a merger with United or another airline, if at all.
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A week before reports of the United-American merger came out, Transportation Secretary Sean Duffy confirmed there is room for consolidation among airlines without specifying which.
“Who knows who’s going to match up, right?” Duffy told CNBC. “There’s always chatter. But is there room for some mergers in the aviation industry? Yeah, I think there is.”