Delta Air Lines was approached by competitor United Airlines last year about a potential merger, a deal that would have combined two of the country’s largest carriers, a new report says.
Though the talks didn’t progress, leadership with Atlanta-based Delta discussed the approach and merits of the potential deal, according to The Wall Street Journal. United CEO Scott Kirby called Delta CEO Ed Bastian as part of the pitch, according to the article. Both companies ultimately moved on from the proposal.
Both Delta and United declined to comment.
The potential deal would have encountered regulatory hurdles, as the two carriers are among the four that have come to dominate the U.S. airline industry, which has become increasingly consolidated over the last 20 years.
This is not the only deal Chicago-based United has considered recently. In February, Kirby pitched a merger between United and American Airlines during a meeting with President Donald Trump. The idea drew sharp criticism from consumers, industry analysts and American itself. Trump also threw cold water on the idea, saying doesn’t like “having them merge.”
“It makes them lazy,” Trump told CNBC in April.
The potential American deal would have been about adding, not subtracting, and creating a “truly great airline that customers love,” Kirby said in an April statement. He also said he was confident the combination could get regulatory approval.
In June, Delta President Peter Carter told CNBC he didn’t see a merger or acquisition in Delta’s future. Also last month at an industry conference, Kirby said it was unlikely there would be any further combinations, saying “you shouldn’t do deals that don’t make economic sense,” CNBC reported.
The deal would have created an operation with a 35% share of the domestic market and about 42% of the global share, said former airline executive and New York-based consultant Robert W. Mann.
That would be “bigger than anything we’ve ever seen in the U.S. industry,” Mann said.
Many dealmakers have anticipated the Trump administration would be more open to large-scale consolidation than the prior administration. As a result, people want to test the water, Mann said.
“If there is a higher level of tolerance, you want to be the first mover because you want the best selection, best choice, and that would suggest that you start early and start big,” Mann said. “If you’re going to go fishing, you go fishing where the big ones are.”
Unlike both Delta and American, United doesn’t have a Southeast hub, so United likely saw an opportunity to expand.
“I think the fact that it didn’t go forward suggests that perhaps Mr. Bastian is comfortable with where he is, and secondarily, that perhaps even he thought that this might be a bridge too far,” Mann said.
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