Current Event: Merger
for US Airways and American Airlines
One of the most prominent topics in the world of business
today is the mergers between airline corporations in the United States.
Previous mergers included those that created both Delta Airlines and United
Airlines. Not only do these mergers change up the business aspects of the
airline companies but it also changes the job market within them.
The most recent merger is the possible one between US
Airways and American Airlines. Many critics say that these mergers are
important to compete with other airline corporations due to the decline in the
number of flights and slump in the airline business. “A combined American and
US Airways would control 20 percent of the domestic market-based on a key measure
of revenue-that would feed international routes to Europe, Asia and Latin
America” (Bartz, Crawley,Diane). It should be also noted that the
groundwork for such a large merger may already have been laid. Chief Executive
for US Airways Doug Parker states that “US Airways is working with legal
advisers and has had preliminary discussions with officials of the Justice
Department’s antitrust division and with congressional lawmakers and staff”
(CHICAGE TRIBUNE). In steady decline of airline markets, American Airlines
filed for bankruptcy in November 2011 and the probability of a merger increased
due to this factor. “CEO Tom Horton initially said any merger should wait until
after American exits bankruptcy protection, but recently the airline has said
it will study various merger options . . . A combined American and US Airways
would rival United as the world’s largest airline” (Freed).
Many business researchers say the likelihood of this merger
is prominent due to the imminent bankruptcy of American Airlines. Managers of
these very large airline corporations may see this opportunity to increase the
declining market and may also increase the number of jobs available. Managers
should also ready themselves for the possibilities of the implications that a
merger may have on its employees, such as relocation and an influx of questions
and concerns from employees. All of the changes that these corporations may
face may ultimately be an amazing feat in the airline industry. The changes may
be dramatic but the airline industry may have a brighter future.
Work Cited
Bartz, John Crawley and Diane. "US Airways Lays
Regulatory Groundwork for Possible Merger." Yahoo! News. Yahoo!, 18
July 2012. Web. 21 July 2012. <http://news.yahoo.com/us-airways-lays-regulatory-groundwork-possible-merger-001912512--finance.html>.
Freed, Joshua. "US Airways CEO Won't Wait Forever for
Merger." Msnbc.com. Msnbc Digital Network, 18 July 2012. Web. 21
July 2012. <http://www.msnbc.msn.com/id/48229408/ns/travel/>.
"US Airways Lays Regulatory Groundwork for Possible
Merger." Chicagotribune.com. N.p., n.d. Web. 21 July 2012. <http://www.chicagotribune.com/business/sns-rt-us-usairways-amrbre86i00h-20120718,0,3942523.story>.
Mergers of big companies to stay operating is not a new tactic. Companies can benefit greatly by using each others resources and cutting down on expenses. With gas prices up and flight fare rising it is not surprising that less and less people are choosing not to fly. This merger is necessary for US Airlines and American Airlines to stay afloat. People will initially lose their jobs with the merger but if the company becomes successful there is not reason to hire more people in the future.
ReplyDeleteMergers are always a good thing. It does keep companies alive and not lost forever. Recently, San Jacinto Area Credit Union merged with Texas Dow Employee Credit Union. Some of the employees that worked for San Jacinto lost their jobs and others did not. As the article states, this raises a lot of questions both to the employee and the customer. For the customer, the merger was not smooth as both companies had planned. The internet websites did not work, they mailed out bad debit cards, etc.. For the employee, many questions must be answered as well. I am sure that if both American and United merge, they too will go through this long process of sorting out all these issues but it will be for the best.
ReplyDeleteSome companies do not have a choice when it comes to merging. A lot of times it comes down to going under or merging to have a future. I know if I was an employee of a company that wasn't doing good I would have to look at a possible merger as being better than my company going under and for sure losing my job. I'd rather take my chances of possibly being able to keep my job with a merger than a guarentee of losing it.
ReplyDeleteA brighter future for the airline industry is something that a great deal of people are looking for. Many people either work for the airlines, depend on them for work travel, or even for travel to vacation or visit family. In any of the ways the airline industry is heavily relied on and should consider meeting travelers halfway. There seems to be so much turmoil in that industry now that travelers are hostile and the airlines seem to be cracking down harder and harder. Of course they have to make whatever changes necessary to stabilize the industry. But then they should make sure as many of the employees from each airline is retained. Of course when there are two companies merging they cannot keep everyone. But this is a good bargaining tool to retain the best of the people employed and weed out the slackers. But they should take care to carefully select who to retain.
ReplyDelete