Merge of American Airlines and Us Airways Essay

The buzz in the airline industry in February 2013 was all about the electric potential spinal fusion between American Airlines and US Airways since that would make the merged company the number one airline in the industry globally. Despite the some cynical comments veteran investors hold for invest in the airline industry, which will be mentioned below, as well as the unforeseen lawsuit being thrown at their way, it is an investment that is potently suggests a lucrative investment in the long run. First of all, the potential profitability of the nuclear fusion reaction could be foreseen by reviewing past cases of airlines mergers such as the merge between United Airlines and Continental Airlines as well as Delta Airlines and Northwest Airlines. Delta Airlines and Northwest Airlines merged in 2008 and United Airlines announced their merger with Continental Airlines 2 days later in 2010. Delta was not profitable right off the bat after their merger but took them a few years to t urn things around balancing with the economical pip and oil prices. Most pros consider the industry untouchable because the airlines own historically operated irrationally and puddle always been at the mercy of oil prices, unions and sunrise(prenominal) competition(Feinberg, 2013) but then again Feinberg says that United, Delta as well as US Airways have been making money for the past three years and may achieve record profits in 2013 (Feinberg, 2013).Post merger of United Airlines and Continental Airlines, the parent company of United Airlines, one of the orbits largest carriers, reported a $448 million quarterly net loss, pressured by high fuel costs and expenses related to problems integrating some operations of United in its merger with Continental Airlines(2012). But the problems appear to be largely over. So far this year, United shares are up 22%, the S&P 500 Index is up 14.5% and Delta shares are up 66%. No doubt, Smisek seeks room to grow (Reed, 2013). United is also flavor to enhance their services for corporate customers by revamping its aircraft that fly from JFK to Los Angeles and San Francisco, adding flat crinkle seating and faster, complimentary Wi-Fi to its premium sections. American is adding state-of-the-art Boeing 777-300ER aircraft to its fleet, the largest new aircraft utilise by a U.S. carrier since1990. Its premium cabin has a walk-up apartment bar stocked with snacksa first for any U. S. airline, the company boasts (Fickenscher, 2013). some other crucial factor that indicates sustainable growth are the soft skills A new American Airlines combining US Airways is fortunate to have US Airways CEO Doug Parker at the helm, because he appears to understand not just the soft and bolts of merging logistics systems but also the human process of ego suppression. This would be the second time his smaller airline has merged with (taken over, some would say) a larger one, and the second time he has let go of the personal identity of the enterprise he built (HBS Working Knowledge at Forbes, 2013). Creating an executive director management team that is functioning well as a bulletproof team is crucial to an M&A situation. They also need to have a clear vision of the company in order to castigate all the minor speed bumps they will inevitably go by means of with the merger. Currently, American Airlines and US Airways are facing on going lawsuits against the US Justice department. Depending on the outcome of this lawsuit, American Airlines will either terminate on with their original merger plan or if blocked, then they would have to reorganize a new plan while operating in bankruptcy.ReferencesFeinberg, Andrew. 2013. News Flash Airlines Soar. Kiplingers Personal Finance 67, no. 7 38. melody Source Complete, EBSCOhost (accessed folk 15, 2013).2012. United Continentals dismission Widens, but Less Than Expected. New York Times, April 27. 4.Regional Business News, EBSCOhost (accessed September 15, 2013).Reed, Ted . 2013. No extol Uniteds CEO Is Buying United Stock. Forbes,com, September 1. Accessed September 15, 2013. http//www.forbes.com/sites/tedreed/2013/09/01/no-wonder-uniteds-ceo-is-buying-united-stock/.Fickenscher, Lisa. 2013. Mergers put biz travelers in first class. Crains New York Business 29, no. 27 3. Regional Business News, EBSCOhost (accessedSeptember 15, 2013).2013. Big great deal Reflections on the American and US Airways Megamerger. Forbes.com 10. February 19. Business Source Complete, EBSCOhost (accessed September 15,2013).