Indeed, this was a distinctive deal in Europe in a way that two full time airlines with different organisational cultures merged with each other to increase their reach, improve quality and gain internal efficiency. The merged airline was…
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(Holtz and Grimme, 2009, p. 13)
An ‘Open Skies’ agreement was signed between USA and European in 2007 that enabled the merged firms to ‘change their ownership structure’ and to get maximum voting rights from Dutch Government authorities. Indeed, the Air France and KLM then became subsidiaries of newly formed KLM – Air France. This was quite helpful in building shareholders’ confidence over top management of new company. (Holtz and Grimme, 2009, p. 14) The governments were paying special attention to develop environmental security laws and regulations to grapple with increasingly large menace of global warming.
The demand of air travel was constantly growing since 2002 because of phenomenal economic growth and increase in real incomes in both developed West and emerging nations. This in turn created more opportunities for airlines that later resulted in higher monetary gains, however, the competition among firms increased substantially because of new entrants joined the arena. Indeed, the conditions were quite favorable because of skyrocketing demand for cargo services besides normal visitors. The merger would have easily increased business efficiency, market share and consumer reach. (Friesen, 2005)
The increase in employment opportunities and business scope improved the standard of living across the world. Consumers, therefore, were inclined to use air travel services in their leisure. Similarly, business personnel were also required travel services to reach their destinations abroad for negotiation with partners, dealers and parties. Hence, propensity to spend for air travel had increased. (Katarzyna, 2004)
The special attention was paid to develop modernised aircrafts with greater seat capacity, range and fuel-efficiency to minimise the threat of carbon emission and pollution. Indeed, the new aircrafts were produced to reduce consumption of fossil fuels.
The bargaining power of customers was medium due to the fact the
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Such dynamics in the industry are reflected in aspects such as competition going notches higher, security measures being in constant upgrading and companies merging and venturing into business partnerships at high rates. In 2004, Air France acquired KLM Royal Dutch Airlines.
U.S. Airline Industry Analysis
Although European players dominate the aviation industry in general, majority of the large players operate in the United States.
Although this strategic amendment assisted the industry to improve the growth at its initial stages, the revenues again declined by the beginning of 1990s.
According to the paper mergers and acquisitions enhance market power of firms involved. This may be driven by adverse changes registered the economic environment such as a fall in demand relative to capacity, a rise in international competition within the domestic market, and/or legislative changes. Similarly, the firms may seek to maintain size relative to rivals customers and suppliers within the market.
Implementation 9 7. Risk 10 Conclusion 11 References 11 Introduction Merger can be defined as a consolidation of two same size companies, which creates a new company. An acquisition is, when a company buy another company and a new company will form (Sherman and Hart, 2006, p.1).
The European market is usually multicultural with airlines from other parts of the world such as Asia and Middle East but the western culture has dominated the European airline industry.
Due to the economic downturn, increased inflation due to high fuel prices, lack of product differentiation, deregulation by the Government and privatization of the industry has experienced a very slow pace of growth.
untries across the globe, including the United Kingdom, North America, Caribbean, Africa, Australia and the Middle East and operates from two main bases in U.K located at London Heathrow and London Gatwick.
The company’s vision is to contribute its share in sustainable
ed of several airline industries such as British aero systems, which is the world’s second largest defense contractor, Rolls-Royce, which is the world’s second largest aircraft engine maker, among others. The UK airline industry has made numerous important contributions to
In this report I have written on who benefits between the industry and the consumer in case of a merger. Report finds that both benefit.
American aviation industry has been qualified us the most profitable
The company has its Headquarters in Baiyun District in Guangdong Province. According to Zhang (1998), the airline underwent a major expansion, which included getting more planes. Following the expansion, airline now has the largest fleet size and, as such, carries the
In the past, the US airline has suffered heavy losses that were a result of the changing business environment. Many of the people that have invested in the industry had to bear with the dwindling fortunes of their
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