American Airlines CEO Robert Isom did little Thursday to dispel rumors about an expanded partnership with Alaska Airlines.
Isom, speaking to analysts and journalists a day later Bloomberg reported The airlines were discussing a deeper partnership, avoided commenting directly on the news but repeatedly said American was open to more partnerships.
“I know they’ve been tremendously independent,” he said of Alaska. “We hope to do more with Alaska in the future.”
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Isom added that American has an “excellent” relationship with the Seattle-based airline.
He didn’t say what else they could do. Alaska and American currently have codeshare and loyalty association where both airlines place their respective codes – “AS” for Alaska and “AA” for American – on some of the other’s flights. The fidelity pact provides an advantage and atmosphere Members earn reciprocal earnings and redemptions on other airlines’ flights, as well as select elite benefits such as complimentary upgrades.
Both Alaska and American are also members of the Oneworld alliance.
It remains to be seen what further expansion of the partnership might look like. It could take the form of a joint venture in which Alaska and American remain independent airlines but agree to coordinate flight scheduling and pricing in certain markets. A joint venture could include revenue and cost sharing, but requires antitrust approval from regulators. American has several international joint ventures, including British Airways, Iberia, Japan Airlines and Qantas Airways.
Isom dispelled thoughts of a possible merger with Alaska, saying American was focused on itself but would be at the “vanguard” of any partnership or asset acquisition opportunity that arises.
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Alaska is completing its 2024 merger with Hawaiian Airlines. The latter successfully transitioned to the former’s reservation system, or passenger service system (PSS), on Wednesday in one of the last major integration hurdles facing passengers.
High fuel prices are driving a rise of merger rumors among US airlines. United Airlines CEO Scott Kirby has floated the idea of a fusion with american to administration officials in Washington. JetBlue Airways is reportedly shopping for yourself. And Spirit Airlines, which still operates in bankruptcy, may be close to getting a rescue of the Trump administration to continue flying, or at least buy time until it can be sold.
When asked about a possible merger between American and United, Isom described such a deal as “anti-competitive” and a bad outcome for both Americans and travelers in general.
“We’re going to be roommates,” Isom said, referring to Chicago O’Hare International Airport (ORD), where both American and United have hubs. “But we’re not getting married.”
The argument for a merger is that a larger airline with a stronger market position could more easily withstand high fuel prices. The last major round of industry consolidation came after fuel prices soared in 2008 with the combinations of Delta and Northwest Airlines, United and Continental Airlines, Southwest Airlines and AirTran Airways and, in 2013, American and US Airways.
“I anticipate that higher fuel prices will cause much more significant structural reform than we’ve seen during this period,” Ed Bastian, Delta’s chief executive, said in early April.
Some consolidation is already occurring. Allegiant Air’s Discount Acquisition of Sun Country Airlines for $1.5 billion has obtained both antitrust and Department of Transportation approval. The airlines expect to close the deal in May subject to shareholder approval.
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