The Merger of American Airlines and US Airways Case Solution
After the deregulation, the company achieved growth in the aviation business and earned a profit of $13.8 billion in 2012, $13 in 2011 and $11.9 in 2010. Moreover, the strategies of both the companies are similar to each other, however there is a slight difference in the policy of business transactions. The pricing and services providing strategies are entirely different from other companies as it offers lower price tickets to the customers as well as offer shorter duration trips. Therefore, the management team believed that if the company provides unique and valuable services to the customers,then it would attract the larger segments of customers as well as bring prosperity in the business.
The management team believed that the merger of the two global companies would be beneficial to the company as well as it would provide a broad range of services to the customers in an efficient manner, which would increasethe market share of the company as well as it would maintain flexibility in the current operations. After the merger of the two companies, the newly proposed structure provided the average marginal return of 72% to the American Airlines and 28% for the US Airways. The company also generatedrevenue of $38.7 billion in 2012. However, this new structure includes 801 narrow jets and 147 full body jets and approximately 563 regional fleets. Moreover, themigration process takes approximately 90-days. The management team saw significant improvement in the acquisition and analyzed that as compared to other companies this merger and acquisition provided maximum profit to the company however,it also included risks as well.
After analyzing the entire case, it is evaluated that the decision of the merger of the two global companies is the right decision of the management. By this merger both the companies could improve their financial position in the market. Moreover, if the company wants to become stable in the market, then it should maintain effective policies which would enhance the profitability of the enterprise. It is also recommended that the company should follow the competitive pricing strategy for its services and should sustain the service quality of its airline service, which would help both the company to preserve its financial position in the market. The main recommendation is to keep sufficient cultural value in the department and that it must understand the values to maintain a productive relationship with the customers. Moreover, if both the companies are stuck into this merger or that they jointly work together for a single objective,then it would get maximum benefits from this merger and would also improve the image of the enterprises in the mind of customers…………………
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