Essay on Mergers and Acquisitions and United States Airways

Submitted By Maurice65
Words: 1291
Pages: 6

Mergers and Acquisitions
BUS 508

ABSTRACT
The purpose of this research is to give an overview of the merger and acquisition between United States Airways and American Airlines. Also, we will access the positive or negative effects due to the merger acquisition as well as examining the organizational structure and determining how the human resources department played a role in changing the company back into a major airline within the industry.

Mergers and Acquisitions When describing the circumstances that resulted in the merger acquisition of United States Airways (U.S. Airways) and American Airlines (AA), we have to understand the root cause in mating these two corporations into one business model. The first reason was the simple decision to bring two major airlines together that were headed into default, especially American Airlines that had become known as one of the worst in the airline industry. Service delays, customer service backlash and employee loyalty were some of the main contributors why this airline needed help and a boost to get back into the competitive market. U.S. Airways was losing its battle with superpower Delta, discount fare air carrier Southwest and mega international flyer United airlines, both American and U.S. Airways were continuously losing their customer base due to the other airline companies merging and giving consumers better customer service, more city destinations to choose from and the attraction of lower fares. American and U.S. Airways were being pushed into the corner of losing their companies, so in order to stay competitive to reclaim some of the market share a merger and acquisition of the American airline by U.S. Airways was the only option in surviving. Secondly, it just made good business sense to merge since the makeup of the airline industry had changed dramatically from nine major air carriers down to four counting the American and U.S. Airways. American airlines was under high scrutiny over its filing of chapter eleven bankruptcy, customer service lows, cancelled or delayed flights during peak travel and employee loyalty ranging from pilot walkouts and agents leaving due to none pay. This acquisition of American by the smaller U.S. Airways was the doorway back into the industry, by reorganizing its infrastructure, delivering a better product, retooling its customer service department and allowing consumers a better choice to destinations needed for business or leisure travel. The newly merged airline will be branded under the American company name, because U.S. Airways needed the foothold American had in the industry from its conception since U.S. Airways built its company from acquiring smaller airlines like American West. The acquisition has officially created the world’s largest airline that includes global destinations that consist of six thousand seven hundred daily departures and arrivals to three hundred and thirty cities spanning fifty countries. Another major sticking point is that this merger acquisition added ten thousand more jobs covering every entry and exit point both airlines occupied.
Next we have to take an in-depth view on what would be some very significant positive or negative effects of the merged companies. The two airline carrier’s main goals were to become a more positive business model within a smaller industry based on company competition. Financially this was a positive acquisition in terms of pulling American out of Chapter 11 bankruptcy and opening U.S. Airways to a newer market base in those cities American airline’s already had an established customer base. As other mergers and acquisitions the company’s outlook was to reestablish a loyal consumer base and eventually attract newer customers away from the other major airline competitors. These outlooks can be achieved by American airlines by allowing passengers better options in scheduled flights, destinations and competitive pricing. Also the…