American Airlines Rejects Potential Merger With United Airlines

American Airlines stock fell in premarket trading Monday after the company rejected talk of a potential megamerger with United Airlines late last week.

The legacy U.S. carrier issued a statement Friday, shortly after the markets closed, to dismiss talk of a potential deal between the two airlines.

"American Airlines is not engaged with or interested in any discussions regarding a merger with United Airlines," it said in the statement. "While changes in the broader airline marketplace may be necessary, a combination with United would be negative for competition and for consumers, and therefore inconsistent with our understanding of the Administration's philosophy toward the industry and principles of antitrust law," it added.

American's shares last fell nearly 3% in premarket trading, reversing gains enjoyed on Friday amid a broad market rally.

United CEO Scott Kirby floated a potential merger with rival American with the Trump administration at the White House in February, but the airline is understood to have been considering the idea since at least last fall.

"Size would help" compete on U.S. outbound flights, Kirby said in the "Stratechery" podcast on an episode that aired in January. He explained that when customers go to the Middle East, they tend to use the region's airlines. "[But] if we're bigger and have more offerings for those customers, possibly, it..[is] more rational for them to fly us when they go to the Middle East."

A consolidation would create the world's largest airline, meaning the prospect has invited heavy regulatory scrutiny and concerns that it could create a market monopoly. The two carriers, along with Delta Air Lines and Southwest Airlines, already dominate about 80% of domestic capacity. A United-American merger would result in the two having roughly 40% of the domestic share, per airline data firm OAG.

"President Trump, he loves to see big deals happen," U.S. Transportation Secretary Sean Duffy told CNBC's "Power Lunch" earlier this month, adding there's "room for mergers in the aviation industry."

However, Duffy flagged: "If there was a merger between some of the larger airlines, they're going to have to peel off some of their assets. We don't want to have this massive infrastructure with one airline in America; again, that will affect pricing in the long run, because it would be a lack of competition."

George Hay, a law professor at Cornell University, previously told CNBC: "This would be the biggest of all time. I can't even see the slightest chance that a court would allow it."

— Leslie Josephs contributed to this report.