United Airlines Holdings Inc has proposed a merger with fierce rival American Airlines in a deal that would be likely to face intense scrutiny.
United Chief Executive Officer Scott Kirby reportedly floated the tie-up with United States President Donald Trump at a meeting on 25 February and also with senior U.S. Government officials.
The two airlines have a combined market capitalisation of US$39 billion (A$54.7 billion) based on their closing stock prices on Tuesday (Wednesday AEST).
The proposal was reported by media outlets including Bloomberg News and Reuters, which cited unnamed sources.
Such a combination would represent the biggest consolidation in more than a decade in the U.S. airline industry, which is dominated by four similarly sized players, according to this Reuters article.
United Airlines (NASDAQ: UAL) shares closed $2.00 (2.10%) higher at $97.20, capitalising the company at $31.54 billion, while American Airlines (NASDAQ: AAL) finished 90 cents (8.01%) up at $12.13, capitalising it at $8.01 billion.
Such a merger would be closely examined by regulators, trade unions and consumer advocates because of the impact on competition and air fares.
It is unclear if more approaches have since been made to the U.S. Government or if negotiations are underway to explore a deal, Bloomberg reported in this story.
Kirby has long believed the U. S. market can support only two dominant global premium airlines.
If the merger proceeded, the enlarged airline would control about 40% of U.S. domestic capacity, but some observers were sceptical.
"This seems hopeless to me. There are huge overlaps on a number of routes and in various metropolitan areas (such as Chicago). No amount of divestitures would fix it," George Washington University’s Competition Law Centre Director William Kovacic was quoted by Reuters as saying.
