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Mergers and Acquisitions - Essay Example

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US airline industry suffered heavily after the 9/11 incident and gradually, over the period of time, smaller airlines actually merged with the larger organizations to survive. As such the overall merger and acquisition spree in the industry suggested a strong concentration…
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Mergers and Acquisitions
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Download file to see previous pages The potential merger was based upon the assumption that this merger will actually result into an over $1 billion in terms of cost savings as well as revenue increase for the American Airways.1 The formal process of merger and acquisition started during the start of 2013 and it was believed that this merger actually resulted into the creation of the largest airline in the world. The overall deal was finalized in December 2013 and American Airways formally acquired the firm
This paper will discuss and explore the reasons behind this merger, the circumstances which actually led to the merger, the positive as well as negative impacts of the merger besides discussing whether the HR practices of the firm were modified to ensure that the overall outcomes of the merger and acquisition were achieved.
9/11 was one of the key events in the history of American airline industry as for the first time, airplanes were used weapons. Strong security concerns resulted into sharp decline in the passenger traffic and loss of revenue. (Rhoades & Waguespack Jr, 2004). Apart from this, the economic events which occurred after 2007 also resulted into an strong decline the profitability as well as the revenue of the major airlines in the industry. Owing to these factors, American Airline filed chapter 11 bankruptcy ad sought protection against the same. As a result of the Chapter 11 Bankruptcy protection, it was considered that the American Airlines may suitably merge with other airline in order to come out of the bankruptcy and pay back to its creditors. As such one of the reasons for entering into this merger and acquisition was to avoid the complete bankruptcy and find suitable buyer who can ensure that the creditors are paid back. As per the agreement, 72% of the shares of the American airline were acquired by US Airways and the remaining 28% were held by the existing shareholders of the firm.
Another important reason for the merger was the cost ...Download file to see next pagesRead More
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