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Mergers, Acquisitions and Takeovers Case Study

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Case Title:

US AIRWAYS-AMERICA WEST MERGER

Publication Year : 2010

Authors: R Coondoo

Industry: Transportation

Region:USA

Case Code: MAA0221IRC

Teaching Note: Not Available

Structured Assignment: Not Available

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Abstract:
In May 2005, America West and US Airways announced an agreement to merge. The merged airline would create the first full-service nationwide low cost airline in the US. The new airline decided to retain the US Airways brand name and expected to be profitable even with fuel prices as high as $50 a barrel. While the airlines had complementary route networks, and the merged entity planned to leverage US Airways bankruptcy situation to reduce costs and integrate operations, some were sceptical about this. The case presents the rationale behind the decision to merge, the synergies expected from the merger and the possible drawbacks that the new company might face. While the supporters of the merger were depending on the expected synergies, others were sceptical about its success.

Pedagogical Objectives:

Keywords : US Airways, America West, Merger, Strategy, Low cost carrier, Integration, Cost synergy, Integration problems, Bankruptcy, Change-over cost, Brand recognition

Contents : 
America West
Overview Of The Us Airline Industry
Competitive Positions Of The Two Airlines
Rationale & Expected Synergies
Us Airways Route Map Before Merger
Americawest Route Map Before Merger
Labor Cost As Percentage Of Revenue
Combined Route Map Of Post-Merger Us Airways

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