The increasingly outspoken chief executive of United Airlines, Scott Kirby, has just set out his vision for one of the most talked-about airline mergers and acquisitions in many years… a potential tie-up between United and its arch-rival American Airlines.
The thinking goes something like this: Combining United and American into a single airline, with United being the leading carrier, would create the “very best” airline in the world. Period, full stop, end of discussion.
In Kirby’s eyes, that’s exactly the prize that the American public could have won, except for one pesky problem: the board of directors of American Airlines, who “declined to engage” United in discussions and “responded by publicly closing the door.”
News of a potential merger between United and American first emerged nearly two weeks ago when news leaked that Kirby had spoken to senior White House officials, and potentially even President Trump himself, about the deal.
At this point, there wasn’t any indication that Kirby or anyone else from United, for that matter, had been in contact with their counterparts at American Airlines to gauge their reaction to such a deal.
It took several days for American Airlines to respond, waiting until markets had closed on a Friday afternoon, to dismiss the very notion of any merger with United, but keeping open the possibility of future consolidation with another carrier in the near future.
More than a week later, Kirby has finally broken cover to tell his side of the story in a lengthy statement.
“Over the last two weeks, there’s been a lot of commentary about a potential merger between United Airlines and American Airlines. And to be direct, here’s what happened: I approached American about exploring a combination because I thought we could do something incredible for customers together,” Kirby wrote.
“I always knew that the only way any merger could be successful (and approved) is if it was great for customers and with a willing partner that shared my big, bold vision. I was confident that this combination, which would have been about adding and not subtracting, creating a truly great airline that customers love, could get regulatory approval.”
The statement continued: “I was hoping to pitch that story to American, but they declined to engage and instead responded by publicly closing the door. And without a willing partner, something this big simply can’t get done.”
Kirby says any tie-up with American Airlines wasn’t about cutting costs but was born out of a “bold idea” to help U.S. aviation reclaim its place as the best in the world.
“After all, flight was born here and the storied names of the past, including both United and American, set the standards that the rest of the world aspired to,” Kirby explained. “By combining our airlines and using that scale to revolutionize our customers’ experience, we’d create a new, thriving U.S. airline that would be the very best in the world for customers – full stop.”
Kirby believes that United’s business strategy and investments in the customer experience are the winning formula and that the American public deserves to have more United by essentially folding AA into the mix.
It’s certainly food for thought, and there’s no question that American Airlines couldn’t have done a better job at destroying its own brand if it had set about doing so.
That being said, would combining two of the Big Three U.S. airlines really lead to a better experience? Without a big competitor, would a combined United and American Airlines have to fight as hard for market share by improving the customer experience and keeping fares low?
Kirby argues that a merger would have been a win for the customer experience, low fares, American jobs, and the U.S economy, although it’s easy for him to say that now. After all, Kirby is no longer interested in wooing AA’s directors and shareholders.
So what now? With the American Airlines deal dead in the water, will United start looking at other possible acquisitions? The hot money is on a possible takeover of JetBlue, although the carrier’s debts remain a big problem.
Or is Kirby waiting to see whether Spirit will fail, allowing United to pick up the carrier’s asset at a bargain basement price? No doubt, we won’t have to wait long to find out.
