American Airlines Group Inc. (AAL) has publicly rejected a merger proposal from rival United Airlines, stating it is "not engaged with or interested in any discussions" regarding a combination. The airline declared such a deal would be "negative for competition and for consumers" and inconsistent with antitrust principles.
The rejection came after United CEO Scott Kirby had floated the merger idea with the Trump administration at the White House in February, having considered it since at least last fall. Kirby argued a larger United could better compete for passengers traveling to the Middle East, where regional carriers dominate. A combined United-American would have become the world's largest airline, holding roughly 40% of domestic capacity according to data firm OAG.
Legal experts were immediately skeptical. Cornell law professor George Hay stated, "This would be the biggest of all time. I can't even see the slightest chance that a court would allow it." Lawmakers, including Senators Elizabeth Warren and Mike Lee, have also voiced bipartisan concerns in a letter, warning a merger could lead to higher airfares and reduced service.
Beyond the merger news, airline stocks faced a double whammy. Oil prices jumped 6% on Monday due to fresh uncertainty around US-Iran peace talks, directly threatening airline profits with higher fuel costs. This reversed gains made on Friday when oil prices had briefly fallen after the reopening of the Strait of Hormuz.
In premarket trading Monday, American Airlines stock fell 3%, wiping out Friday's gains. Shares of United, Delta, and Southwest all fell more than 2%. Cruise operators Royal Caribbean, Norwegian Cruise Line, and Carnival were also down around 2%.
Operational disruptions added further pressure. Over 1,200 Southwest flights were delayed Sunday—about 29% of its schedule. American delayed 799 flights (22% of schedule), while Delta and United saw 16% and 13% of flights delayed, respectively.
American Airlines reports quarterly earnings on Thursday, with United and Southwest also reporting this week. The carrier's stock is down 17% for the year, though it had surged 19% in April on hopes for Middle East peace and jumped 8% last Tuesday on initial merger reports.
