Scott Kirby has never been one to let a crisis go to waste.
The United Airlines CEO, who built his reputation as one of the most aggressive strategists in commercial aviation, is now openly entertaining what would be the most consequential airline deal in a generation: a potential merger with American Airlines. The idea, once whispered in boardrooms and dismissed by regulators, has moved from theoretical to plausible — and Kirby himself is doing little to tamp down speculation.
In a recent interview with Fortune, Kirby acknowledged that a combination with American Airlines is something United has actively considered. He stopped short of confirming formal negotiations, but his comments were striking for their candor. “We look at everything,” Kirby told the publication. “And when the competitive dynamics change, you have to be willing to rethink what’s possible.”
Those competitive dynamics have changed dramatically. American Airlines, once the world’s largest carrier by revenue, has spent the better part of two years stumbling through a botched distribution strategy, a revolving door of senior executives, and a balance sheet that looks increasingly fragile. Its stock has cratered. Its corporate travel share has eroded. And its board, under mounting pressure from shareholders, appears open to conversations it would have rejected outright just 18 months ago.
For Kirby, the timing is almost too perfect.
United has emerged from the post-pandemic period as arguably the best-positioned legacy carrier in the United States. Its “United Next” fleet modernization plan is delivering results. Premium revenue is surging. The airline’s hub strategy — anchored by Newark, Denver, Houston, San Francisco, and Chicago — gives it a geographic footprint that complements American’s strength in Dallas-Fort Worth, Charlotte, Miami, and Philadelphia with remarkably little overlap on domestic routes.
That complementary network is the core of the strategic logic. A combined United-American would control roughly 35% of U.S. domestic capacity and an even larger share of transatlantic and transpacific flying. It would dwarf Delta Air Lines, currently United’s closest competitor, and create an entity with annual revenues exceeding $90 billion.
But size alone doesn’t make a deal work. And the obstacles here are enormous.
The Regulatory Calculus Has Shifted — But How Far?
The most obvious question is whether Washington would allow it. Under the Biden administration, the Department of Justice took an extraordinarily aggressive posture toward airline consolidation, successfully blocking the JetBlue-Spirit merger and signaling that further concentration among the Big Four carriers was a nonstarter. The DOJ’s antitrust division, led at the time by Jonathan Kanter, made clear that consumer harm from reduced competition would be the lens through which any major airline deal was evaluated.
The political environment today looks different. The current administration has signaled a more permissive approach to mergers across multiple industries, from technology to healthcare. Transportation Secretary Sean Duffy has publicly stated that consolidation can benefit consumers when it produces operational efficiencies and better service. And the DOJ’s antitrust leadership has adopted a posture that is less reflexively hostile to horizontal mergers than its predecessor.
Kirby appears to be reading these signals carefully. As Fortune reported, the United CEO has been making the rounds in Washington, meeting with lawmakers and administration officials to gauge appetite for a deal of this magnitude. He’s reportedly framing a potential merger not as an exercise in market dominance but as a necessary response to growing competition from ultra-low-cost carriers, Gulf state airlines with government subsidies, and the increasing power of global alliances.
It’s a familiar playbook. When Delta merged with Northwest in 2008 and United absorbed Continental in 2010, proponents made similar arguments about scale being essential to compete globally. Those deals ultimately won regulatory approval, though they required significant route divestitures and gate concessions at key airports.
A United-American combination would face far more scrutiny. The overlap in certain hub markets — particularly Chicago O’Hare, where both carriers have massive operations — would likely require divestitures that could benefit competitors like Southwest or even create openings for newer entrants. Labor integration, always the most painful element of airline mergers, would be extraordinarily complex given the size of both carriers’ unionized workforces.
And then there’s the debt. American Airlines carries more than $30 billion in long-term debt, a legacy of its aggressive borrowing during the pandemic and its earlier bankruptcy restructuring. United’s balance sheet is healthier, but absorbing that debt load would test even Kirby’s financial engineering skills.
Wall Street is divided. Some analysts see a combined carrier as inevitable given the structural pressures facing the industry. Others view the regulatory risk as too high and the integration challenges as potentially value-destroying. The history of airline mergers is littered with deals that looked brilliant on paper and took years to deliver promised synergies — if they ever did.
Kirby knows this history better than most. He was the architect of the America West-US Airways merger in 2005 and played a central role in US Airways’ subsequent acquisition of American Airlines in 2013. That deal, which created the current American Airlines, was supposed to produce a dominant carrier with unmatched scale. Instead, it produced years of integration headaches, cultural clashes, and operational disruptions that the airline arguably never fully recovered from.
So why would this time be different?
Kirby’s answer, based on his public comments, comes down to two things: United’s operational discipline and the changed competitive environment. United has invested billions in technology, fleet consistency, and employee training over the past five years. Its on-time performance and customer satisfaction scores have improved markedly. Kirby believes United has built a management infrastructure capable of absorbing a large acquisition without the chaos that plagued previous deals.
The competitive argument is harder to dismiss. Low-cost carriers like Frontier and Spirit (the latter now in bankruptcy proceedings) have pushed relentlessly into markets once dominated by legacy airlines. Internationally, carriers like Emirates, Qatar Airways, and Turkish Airlines continue to expand with the backing of sovereign wealth. And the rise of premium economy as a critical revenue category has intensified competition for the most profitable passengers.
A merged United-American would have the scale to compete on all these fronts simultaneously. More routes. More frequencies. More premium seats. More loyalty program members — a currency that has become, in some ways, more valuable than the airline operations themselves.
American’s AAdvantage program, with its tens of millions of members and co-branded credit card relationships with Citi, would be a prize worth billions on its own. United’s MileagePlus program, already considered one of the industry’s most valuable loyalty platforms, would become even more powerful with the addition of American’s member base.
The labor question looms large. The Association of Professional Flight Attendants, which represents American’s cabin crews, has been in contentious contract negotiations for years. United’s pilots, represented by ALPA, recently secured an industry-leading contract that would set the baseline for any combined seniority integration. Merging pilot seniority lists — the most politically charged issue in any airline combination — could take years and generate enormous internal friction.
But Kirby has navigated these waters before. Twice.
What makes this moment different from previous consolidation waves is the degree to which the pandemic permanently altered the economics of air travel. Business travel, while recovering, has settled at roughly 75-80% of 2019 levels and shows no signs of returning to its pre-COVID peak. Airlines have compensated by shifting toward premium leisure travelers and investing in products — lie-flat seats, airport lounges, bundled fare packages — that blur the line between business and leisure flying.
This structural shift favors scale. The airlines with the most routes, the most premium inventory, and the most sophisticated revenue management systems are capturing a disproportionate share of high-yield passengers. United and Delta have been the primary beneficiaries. American, despite its size, has fallen behind on all three dimensions.
Robert Isom, American’s CEO, has acknowledged the airline’s struggles but insists a turnaround is underway. He reversed the disastrous changes to AAdvantage that alienated corporate travel managers and has refocused the airline on premium product investment. But the financial damage has been done. American’s margins trail both United and Delta by significant margins, and its stock price reflects the market’s skepticism about a standalone recovery.
For American’s board, a merger offer from United — particularly one at a meaningful premium to the current stock price — could be difficult to refuse. Fiduciary duty cuts both ways. Rejecting a credible offer that would deliver immediate value to shareholders, in favor of a turnaround plan with uncertain prospects, carries its own legal and reputational risks.
None of this means a deal is imminent. Kirby’s public comments may be as much about positioning as about signaling genuine intent. By floating the possibility, he puts pressure on American’s board, signals confidence to United’s shareholders, and tests the regulatory waters without committing resources to a formal bid. It’s a chess move, not a checkmate.
But the pieces are on the board. American is weakened. The regulatory environment is permissive. United has the operational credibility and financial strength to be a credible acquirer. And the strategic logic — while not without significant risks — is more compelling than at any point in the last decade.
The last great wave of U.S. airline consolidation, from 2008 to 2013, reduced the number of major carriers from six to four. If Kirby gets his way, the next wave could reduce it to three. That prospect will thrill investors, terrify consumer advocates, and keep antitrust lawyers busy for years.
Scott Kirby is betting that he can thread the needle. Given his track record, dismissing the possibility would be unwise.
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