In the past two decades, nine major airlines consolidated into four mega-airlines: Delta, American Airlines, Southwest, and United Airlines. A later merger was the $11 billion union of American Airlines and US Airways that was finalized on October 17, 2015. Initially, the merger was challenged based on antitrust laws, but it was later allowed after an agreement was reached between the government and the airline.
Research the US Airways–American Airlines merger, then write a paper addressing the following aspects of the topic:
- Briefly address the company profiles of US Airways and American Airlines before the merger (e.g., company mission, number of employees, head office personnel, flights per day, number of countries served, as well as any other relevant information).
- Describe factors that led to the proposal of the merger.
- Briefly discuss pros and cons of the merger (effect on the industry, effect on consumers) based on the following:
- market concentration,
- economies of scale,
- ticket price,
- frequent flyer,
- Department of Justice decision to allow the merger, and
- your own viewpoint on the merger. (Was it a good decision to allow it, or not?) Support your response.
- List and briefly explain different types of risk that might arise in a merger.
- How will this merger impact market power for the airlines involved, as well as for the remaining airlines?
Your paper must be a minimum of four pages in length, not including the cover and reference pages. A minimum of three outside sources must be used.