Mergers and Acquisitions in the Airline Industry: a Number of Conflicts Related to Seniority Issues - Research Paper Example

While talking about mergers one thing should be kept in mind that, all the mergers do not take place adopting consent of both parties who are merging together. On some occasions, mergers take the form of a hostile take over where one company wants to take control over another company without taking the consent of the other company. Mergers can take place in different kinds of environments. Usually, mergers show a tendency to take place in waves. For example, when stock market experiences a boom related to the stock prices of the different airlines, it very often makes mergers very attractive to the business owners as under boom acquiring other companies becomes relatively less expensive by paying for the acquired companies’ high valued shares.

However, in a situation when stock prices fall, it may make a company undervalued and may lead to a favourable situation for acquisition. In some cases, some industries are compelled to adopt the process of mergers due to some serious troubles facing that industry. Globalization and regulatory activities also influence the likelihood of mergers. The major factor that prompts the merger process is “Synergy”, can also be considered as the main driving force. It pertains to the business in respect of cost reductions, savings and significant increments in the revenue earnings.

The companies especially the aviation industry, retrenches the staff level by keeping only a single CEO, Managing Directors etc. along with some skilled workforce. This aids in the aggregation of a lump sum amount of savings, which in turn raises the Purchasing Power of the company.