Saturday, July 21, 2012

Applied Strategy - Current Event - Merger for US Airways and American Airlines


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>.

4 comments:

  1. 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.

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  2. Mergers 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.

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  3. Some 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.

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  4. A 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.

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