Key insights
- Reports of United Airlines CEO pitching a merger with American Airlines to the Trump administration have caused a surge in both companies' stock prices. While the deal faces potential antitrust hurdles, investors appear optimistic. Both airlines are scheduled to report earnings next week, where executives may face questions about the merger reports. Overall, the news provides a short-term positive boost to the airline sector, but regulatory risks remain.
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Shares of United Airlines and American Airlines are taking off on reports of potential merger talks.
United Airlines (UAL) CEO Scott Kirby has pitched the idea of United acquiring American Airlines (AAL) to U.S. government officials, Bloomberg reported last night. Reuters later reported that the pitch came in a White House meeting with President Donald Trump in late February. American shares jumped close to 8% in recent trading, while United shares climbed about 2%.
Such a deal would likely face antitrust concerns, as it would create the largest airline in the world with over $110 billion in annual revenue, compared to the next largest in Delta Air Lines (DAL) with $63 billion in sales last year.
United declined to comment on the reports, and American did not respond to an Investopedia request for comment in time for publication.
While it remains unclear whether United and American have held merger talks, Tuesday's gains suggest investors are bullish on the idea of a deal.
Airline deals have faced significant hurdles in recent years, with JetBlue (JBLU) and Spirit Airlines calling off a merger in 2024 after it was blocked by regulators. JetBlue has undertaken partnerships with American and United, and its previous collaboration with American was ruled as reducing competition by a judge in 2023.
Executives from both airlines could face questions about the reports from investors and analysts when they report earnings next week, with United's results due April 22 and American's set for April 23.
Even with Tuesday's gains, United and American shares are still down 13% and 20%, respectively, since the start of the year.
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