United Airlines CEO Scott Kirby took his proposed merger with American Airlines off the table on Monday after it generated backlash from antitrust experts, lawmakers, and President Donald Trump.
Two weeks ago, reports surfaced of Kirby floating the potential merger with Trump during a private meeting in late February. Since then, the deal has been widely panned as one that would further reduce competition in an industry that is already highly consolidated, cut flight routes, and raise ticket prices for customers.
In his latest statement, Kirby stood by his proposal but ruled out a merger after American rejected the offer.
“I approached American about exploring a combination because I thought we could do something incredible for customers together,” he said. “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.”
“I was hoping to pitch that story to American, but they declined to engage and instead responded by publicly closing the door,” the executive added. “And without a willing partner, something this big simply can’t get done.”
American declined to comment on Kirby’s statement, but the airline previously said it was “not engaged with or interested in any discussions” about the merger.
American CEO Robert Isom also rebuffed the merger last week, telling CNBC that it “was a nonstarter from the get-go” based on antitrust concerns. As a result, the transaction was unlikely to pass the regulatory process.
Kirby felt otherwise, saying federal regulators “would have recognized the benefits to customers, our shared employees and communities from coast-to-coast and around the world.”
He argued that a United-American combination could “scale and grow” both airlines, “unlock incredible, new opportunities” for their customers and employees, and “create a great, new U.S. airline with the scale to compete and lead around the globe.”
Proponents of the merger said it would enable the two leading U.S. airlines to expand their global footprint by competing more effectively with foreign carriers on overseas flights.
“Today, there’s a big trade deficit with foreign flagged airlines – they fly about 65% of the long haul seats into our country even though only 40% of the customers are foreign citizens – and the combined scale of United and American would be a better way to compete with foreign carriers,” Kirby said, adding that a “larger U.S. global airline would deliver U.S. jobs and economic opportunities.”
FLOATED UNITED-AMERICAN MERGER COULD OPEN DOOR TO ANOTHER AIRLINE DEAL
While the Trump administration is business-friendly, the president said he didn’t want to see United combine with American because he’s concerned they would become “lazy.”
Instead, Trump suggested he would be open to saving Spirit Airlines with some sort of federal bailout. The low-cost airline and the federal government are currently negotiating.