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Talk of a blockbuster merger between United Airlines and American Airlines went nowhere. Now, it appears United is setting its sights on … well, no one.
The Chicago-based carrier on Wednesday said it expects to sit out any big airline industry dealmaking in the near future after American rebuffed its overtures about joining forces.
“I don’t think that United, at least, is going to participate in any consolidation, for any time I can see in the foreseeable future,” CEO Scott Kirby said, speaking Wednesday at the Bernstein Strategic Decisions Conference in New York.
Why’s that newsworthy, you might ask?
For one, there had been a lot of speculation swirling that United might be interested in a merger with some other airline — even after American in April publicly said it had no interest in a tie-up with its top rival.
Some industry pundits had suggested, at the time, that United — in floating a deal with American — might have been trying to soften the proverbial ground with regulators to set the stage for a potential acquisition of JetBlue.
It looks like we can rule that out.
“Just idiotic,” Kirby said of the idea Thursday.
“I wish them luck,” he said of JetBlue — but added: “The last thing I’m going to do is buy a route network that loses money.”
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He’s referring to JetBlue’s lackluster financial performance of recent years, which has seen the carrier lose money each year since 2019. It posted a loss of more than $300 million during the first quarter of this year.
Sticking with Blue Sky
Kirby maintained his support for United and JetBlue’s new Blue Sky partnership, which launched last fall and now includes reciprocal loyalty benefits for MileagePlus and TrueBlue loyalty members.
The arrangement will also lead to United’s return to New York’s John F. Kennedy International Airport (JFK) next year.
But it appears that will be the extent of the two carrier’s relationship, at least for the time being.
Whatever happened to United-American talk?
Kirby in late April confirmed he “approached American” about exploring a merger, which would have created — by far — the largest U.S. airline, arguing he “thought we could do something incredible for customers together.”
Such a deal would have raised significant antitrust concerns, experts told TPG, and American publicly threw cold water on the idea before the talks advanced.
Mergers yet to come?
Still, airline industry leaders have speculated more dealmaking may be yet to come — especially as carriers continue to face high fuel prices.
In April, Delta Air Lines CEO Ed Bastian noted similar circumstances in the 2000s drove the wave of consolidation across the U.S. airline sector.
Worth noting: we’ve already seen one merger this year. Low-cost Allegiant Air this month closed on its acquisition of Minnesota-based Sun Country Airlines.
Bottom line
Even if merger talk heats up across the industry, though, Kirby said United will likely steer clear, having taken a swing at the only deal it was (apparently) interested in.
“I for many years, have thought that only the big kind of transaction that we tried was the only one that made economic sense,” he said. “I also knew, though, that the big transaction required a willing partner. Which we clearly don’t have.”
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