United Airlines CEO Scott Kirby has floated the idea of merging with American Airlines, potentially creating a genuine US flag carrier with 9 per cent of the global airline market by passenger-miles, according to Jefferies analysis. Such a combination would create the world's largest carrier, surpassing even the scale of Qantas or British Airways.

However, the merger faces significant antitrust hurdles and would create a domestic powerhouse with 39 per cent of total US capacity. In key cities like Chicago and Phoenix, the combined airline would control over 40 per cent of available seat miles. Airlines typically justify mergers by promising expanded routes rather than higher fares, but with domestic airfares already at all-time lows when adjusted for inflation, cost-cutting opportunities appear limited.

American Airlines, valued at just $8 billion after losing two-fifths of its market value in two years, would likely benefit more from a merger than United. The deal would be particularly challenging for American's 139,000 employees, as regulatory approval would require abandoning decades of antitrust orthodoxy. While investors might seek synergies, previous mergers have shown that cost-cutting is harder than promised, with American's 2013 acquisition of US Airways delivering most benefits through revenue growth rather than expense reduction.