AAL Stock Advances After-Hours Following Report Of UAL CEO Combining His Past And Present Companies

• It is unclear if a process is underway to explore a deal, the report noted.
• Kirby was previously President at American Airlines, before he switched over to United.  
• A combination between American Airlines and United Airlines, therefore, would create the largest airline on the planet and might pose antitrust concerns, Bloomberg noted.

Shares of American Airlines (AAL) jumped 5% on Monday following a media report that United Airlines (UAL) CEO Scott Kirby has floated a possible combination with the rival company.

According to a report from Bloomberg, citing people familiar with the matter, Kirby pitched the idea to senior government officials. It is unclear if a process is underway to explore a deal, the report noted. Kirby was previously President at American Airlines, before he switched over to United.  

Currently, four major carriers — American Airlines (AAL), Delta Air Lines (DAL), United Airlines (UAL), and Southwest Airlines (LUV) — control the majority of the U.S. domestic passenger market. A combination between American Airlines and United Airlines would create the largest airline on the planet and might pose antitrust concerns, Bloomberg noted.

“I listened to most of our competitors at the J.P. Morgan conference this week and many said some version of ‘hope is our strategy.’ It's possible they're right and that the war ends quickly. But if it doesn't, this will be our opportunity down the road to buy assets, absorb network changes, etc.,” Kirby said last month in a memo to employees in light of jet fuel prices rising against the backdrop of the U.S.’s ongoing war with Iran and highlighting his interest in purchase opportunities.

Consolidation In Airlines

Earlier this month, U.S. transportation secretary Sean Duffy said in an interview with CNBC that there is room for consolidation in the industry. Trump loves to see big deals happen, Duffy said.

Duffy, however, reportedly added that any potential deal in the industry would face scrutiny on impact on ticket prices and competition. He also reportedly warned that companies will have to peel off some of their assets if there is a merger involving two major airlines in order to avoid a consolidation of market share.

Other Merger Talks

Last month, Semafor reported that JetBlue (JBLU) is considering selling itself to a rival airline and has tapped advisers to assess the viability of the plan. The company reportedly considered scenarios of how a deal with United Airlines, Alaska Airlines, or Southwest Airlines might fare in Washington.

JetBlue’s deal to acquire Spirit Airlines was blocked on antitrust grounds in 2024. U.S. airline mergers have to be reviewed and approved by the Transportation Department and the Department of Justice.

How Did Retail Traders React?

On Stocktwits, retail sentiment around AAL stock stayed within the ‘bearish’ territory over the past 24 hours, while message volume remained at ‘normal’ levels.

A Stocktwits user expressed pessimism about the airline sector in light of higher jet fuel prices and inflationary pressure.

Another cheered the AAL’s after-hours rally.

AAL stock has gained 17% over the past 12 months. 

Read More: Why Is HOTH Stock Up 70% After-Hours Today?

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