AAL Stock Slumps After-Hours As Airline Says ‘Not Interested’ In Merger With UAL

• The company said that a merger with United would be negative for competition and for consumers.
• The clarification comes on the heels of a Bloomberg report earlier this week that UAL CEO Scott Kirby has floated a possible combination with the rival company.
• According to the report, Kirby pitched the idea to senior government officials.

Shares of American Airlines Group Inc. (AAL) fell by over 1% after-hours on Friday after the company said that it is not interested in any talks of a merger with rival United Airlines (UAL).

“While changes in the broader airline marketplace may be necessary, a combination with United would be negative for competition and for consumers, and therefore inconsistent with our understanding of the Administration’s philosophy toward the industry and principles of antitrust law,” the company said.

The clarification comes on the heels of a Bloomberg report earlier this week that UAL CEO Scott Kirby has floated a possible combination with the rival company.

Kirby’s Interest

According to the report, 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. A combination between American Airlines and United Airlines would create the largest airline on the planet and might pose antitrust concerns, Bloomberg then noted.

Currently, four major carriers — American Airlines, Delta Air Lines (DAL), United Airlines, and Southwest Airlines (LUV) — control the majority of the U.S. domestic passenger market.

Duffy On 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.

How Did Retail Traders React?

On Stocktwits, retail sentiment around AAL and UAL stocks jumped from ‘neutral’ to ‘bullish’ territory over the past 24 hours. Retail chatter on AAL stayed at ‘high’ levels while on UAL, it stayed within the ‘low’ territory.

AAL stock has risen 35% this year, while UAL gained about 54%.

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