UAL CEO Scott Kirby Says He’s Skeptical About Chasing Smaller Mergers After Talks With AAL Ended

• In an interview with The New York Times, Kirby declined to say whether United would pursue the JetBlue acquisition.
• He also stated that United Airlines could turn industry weakness into growth opportunities by potentially picking up aircraft deliveries that other carriers have canceled or delayed.
• Kirby added that elevated jet fuel prices may linger for a while, and airlines have pushed fares higher to offset those costs

Shares of United Airlines (UAL) were back in the spotlight on Wednesday after CEO Scott Kirby told The New York Times he's skeptical about chasing smaller mergers, suggesting the effort isn't worth the payoff without a transformative partner like American Airlines.

No Remarks On United-JetBlue Merger

After weeks of speculation by investors and analysts over a possible JetBlue acquisition, Kerby declined to say whether the company would pursue this deal, according to The New York Times.

"Doing a merger takes a lot of calories and a lot of energy, and it's about the same amount of calories and energy regardless of the size of the merger," he stated. Kirby noted that combining with another airline could take years, requiring the integration of computer systems, fleets, airport operations, and labor contracts.

After the setback from his American Airlines merger ambitions, Kirby stated that mergers with other airlines might not be worth it. "The hurdle is a whole lot higher for a small airline than it is for a big airline, for me," Kirby added.

In a statement on Monday, Kirby confirmed he had approached American Airlines about a merger, and outlined what the combined carrier would look like. He also noted that talks with American Airlines had ended.​

"In the past, airline mergers usually have been about two struggling airlines coming together to cut costs, flights, and headcount. My aspirations could not be more different,” he noted.​

“It was hard for me to walk away from it with people thinking this wouldn’t be good for customers, because I know it would have been,” Kirby told The New York Times.

He said United will grow by getting more out of what it already has, such as swapping smaller planes for larger ones on routes into hubs like Newark and San Francisco to boost passenger capacity without adding flights.

Demand Likely To Drop As Prices Rise

On Jet Fuel prices, Kirby added that elevated jet fuel prices may linger for a while, and airlines have pushed fares higher to offset those costs, but he warned that customer demand might drop as prices become too high. 

He also stated that United could turn industry weakness into growth opportunities by potentially picking up aircraft deliveries that other carriers have canceled or delayed. 

“We’ve talked to the aircraft manufacturers and said when other people start to defer, which they’ve started to call them about, call us, we might take more,” he said.

How Did Retail Traders React?

On Stocktwits, retail sentiment surrounding the stock has flipped to ‘neutral’ from ‘bullish’, while message volume also slipped to ‘low’ from ‘high’.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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