No planes were repainted and no executives were sacked. Yet Wall Street, Washington and the aviation industry can’t stop talking about plans and deals that would fundamentally upend America’s airlines.
The sector has been abuzz for weeks over mergers, partnerships and the government’s bailout plan. For what? Years of rising costs and low profits have weakened many airlines, while a few companies have become dominant by catering to wealthy travelers.
The biggest airlines account for most of the industry’s profits, but they can’t easily expand without gobbling up rivals for scarce planes and airport gates — the building blocks of the business. And some of the smaller, less profitable carriers, which were struggling to survive, are being hit by soaring jet fuel prices due to the war in Iran.
Then there is the federal government. President Trump and his aides have recently expressed openness to airline mergers, acquisitions and bailouts, even though many consumer groups say such deals would leave Americans with fewer airlines to choose from and likely result in higher fares.
“Suddenly there’s no speed limit on the highway,” said William J. McGee, a former airline dispatcher and senior fellow for aviation at the American Economic Liberties Project, a left-leaning group. “Not everyone is going to drive 100 miles an hour, but one or two will try.”
Discussions over airline deals have intensified in recent weeks, harking back to the wave of consolidation about 15 years ago that left the country with four dominant carriers: Delta Air Lines, United Airlines, American Airlines and Southwest Airlines.
But the mergers that created these four companies would pale in comparison to the deal that rocked the industry last week.
Some news organizations reported that United Chief Executive Scott Kirby floated the idea of a merger between his company and American in conversations with Mr. Trump and other administration officials. This combination would create a giant operating two out of five flights in the United States.
American said it was opposed to the idea, as did senators from both parties. The deal was too rich even for Mr. Trump, who for some years owned a small airline, Trump Shuttle. The president came out against the deal this week, even as he canvassed suitors for struggling Spirit Airlines.
The episode was about the industry’s divergent fortunes. Delta and United generate most of the industry’s profits because they cater to travelers who spend thousands of dollars on lie-flat first-class seats. Most others lose money or make modest profits.
After the Covid-19 pandemic, many airlines struggled to find their footing. They sought to sell more tickets by competing fiercely on popular routes. Meanwhile, labor costs and other expenses have increased rapidly.
Geopolitics has added new, unpredictable tensions. After Russia invaded Ukraine, much of the planet’s airspace above Russia was closed to U.S. and European airlines, forcing them to fly longer routes. Then the United States and Israel went to war with Iran, and the price of jet fuel nearly doubled.
“There are simply airlines that have never been able to get a foothold for various reasons,” said Savanthi Syth, an industry analyst at Raymond James. She added: “That’s why consolidation is happening, because airlines don’t have normal years to catch up. »
United, American, JetBlue and other airlines declined interview requests for this article.
No carrier is in a more precarious position than Spirit. After facing high costs, competition, a failed merger and engine problems, the company filed for bankruptcy at the end of 2024. It emerged last year to file for bankruptcy again in August.
The Trump administration plans to support Spirit with a $500 million federal bailout. Speaking at the White House on Thursday, Mr. Trump said he was open to the federal government purchasing Spirit outright.
“You know, I like to have a lot of airlines, so it’s competitive,” he said, adding, “If we could get it at the right price, I would do it to save the jobs.”
The administration blamed Spirit’s problems on the Biden administration’s decision to block JetBlue’s proposed acquisition of Spirit.
But it’s unclear whether Spirit’s merger with JetBlue, which is also struggling, would have been enough. The history of the sector is full of failed or difficult mergers.
Several transactions have taken place recently.
Alaska Airlines acquired Hawaiian Airlines in 2024, giving it the planes it needed to add flights to London, Rome, Seoul and Tokyo. Last year, Republic Airways, a regional carrier, purchased another regional carrier, Mesa Airlines. And Allegiant Air and Sun Country Airlines, two successful low-cost airlines, are merging.
Administration officials say more are welcome.
“Is there room for mergers in the aviation industry? Yes, I think so,” Transportation Secretary Sean Duffy said on CNBC this month.
The companies facing the most pressure are low-cost airlines. Rising costs in recent years, particularly for pilots and other professionals, have weighed heavily on them. The biggest airlines have also attracted many customers with “basic economy” deals.
“There is clearly pressure for the U.S. market to do something over the next few months,” wrote John Grant, principal analyst at OAG, an aviation data provider, in a blog post this week.
Airlines are also considering deals that will not result in mergers.
On Thursday, American Airlines boss Robert Isom said he was ready to deepen his partnership with Alaska Airlines.
Although United may not come to terms with American, industry analysts say United could end up acquiring a smaller carrier like JetBlue.
JetBlue isn’t big enough to compete with America’s largest airlines, and its costs aren’t low enough to significantly undercut them. The airline, which has not made an annual profit since 2019 and is heavily in debt, is trying to cut costs, reduce delays and sell more premium seats.
Delta, the most profitable airline, is probably in the most enviable position, analysts say, because it has nothing to buy. Southwest, another relatively powerful player, has generally avoided acquisitions, engaging in few, mostly small deals.
Still, the lure of deals can be hard to resist, analysts say, especially if executives fear further mergers could weaken them.
Talk of a new wave worries some antitrust experts who say the industry is already an oligopoly. If the number of airlines shrinks further, travelers will have fewer choices and pay higher fares, said Diana Moss, vice president and director of competition policy at the Progressive Policy Institute, a centrist Democratic think tank.
Reducing an industry to three large companies instead of four, Ms. Moss said, “would give the big players significantly more pricing power.”
