Subject category:
Strategy and General Management
Published by:
IBS Research Center
Length: 16 pages
Data source: Published sources
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https://casecent.re/p/66711
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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.
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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.