Mergers and Acquisition Course title: Bus 508-Contemporary Business Use the Internet to research a publicly traded company in the United States that has undergone a merger or acquisition within the last three (3) years. Take note of the circumstances surrounding the merger or acquisition. I. Examine the circumstances that resulted in the merger or acquisition for the selected company. Speculate on two (2) reasons why the resulting decision to merge or to acquire / be acquired was made.
Public traded company in United States that has undergone a merger within he last three years was the merger between American Airlines and US Airways Group on December 9, 2013. The merged airline inherits the American Airlines name under American Airlines Group Inc. And the US Airways CEO. The company now lists on NASDAQ Global Select Market under the ticker symbol AL. (American Airline, 2014) American Airlines parent MAR Corp.. ND US Airways Group officially announced their $17 billion merger, creating the world’s largest airline and likely marking the end to a wave of major-carrier consolidation that has helped put U. S. Airlines on more sound financial footing. The new American Airlines Group is instantly bigger than Chicago-based United Airlines with a global network with nearly 6,700 daily flights to more than 330 destinations in more than 50 countries and more than 100,000 employees worldwide. American Airline, 2014) In recent years the U. S. Airline industry has come to resemble a singles party, where large airlines have been gradually hooking up until suddenly there are only two remaining. The American Airlines-US Airways tie-up smacks of the last two singles shacking up due to expediency rather than out of love. Their exchange of vows is because it is easier to deal with the pressures of the world and meet your financial commitments when you have a life partner. (Rushes, 2013).
Two reasons why the resulting decision to merge was made were; AAA and US Airways argued that the merger was vital as the two companies seek to cut their costs AAA went into bankruptcy in 2011, the seventh US carrier to go bust since 2000. The deal brings the company back out of bankruptcy (Rushes, 2013). And the merger appears to have been driven by trade unions. American Airline’s main unions backed the merger because it promised less job losses Han the alternative solo strategy for the company. (Sinews, 2014) II.
Assess the significant positive (or negative) effects of the merger or acquisition. Provide at least two (2) examples of those effects now that the merger or acquisition has been completed. Although American and US Airways have come together as one company, the process to achieve a Single Operating Certificate is expected to take approximately 18 to 24 months. In the meantime, customers should continue to do business with the airline from which travel was purchased just as they did before the merger. In short, it is “business as usual. The airlines’ separate websites, AAA. Com and caraways. Com, as well as the two airlines’ reservations systems and loyalty programs, will continue to operate separately until further in the integration process (Layton, 2013). The significant positive effect of the merger is the customer benefits of the transaction to be rolled out over time including; A icosahedra agreement between American and US Airways, creating more convenient access to the combined company’s global network More choices and connectivity, with nine hub airports across the U. S.
Global access to a stronger narrowed alliance – including joint businesses with British Airways, Iberia and Funfair across the Atlantic and with Japan Airlines and Santa across the Pacific – creating more options for travel and benefits both domestically and internationally Reciprocal American Admirals Club and US Airways Club benefits and reciprocal elite recognition Upgrade reciprocity Consolidation of loyalty programs and expanded opportunities to earn and redeem miles across the combined network Full integration of policies, websites, kiosks and customer-facing technology to ensure a consistent worldwide travel experience Co-location of ticket counters and gates in key markets With firm orders for more than 600 new mainline aircraft, American will have one of the most modern and efficient fleets in the industry, and a solid foundation for continued investment in technology, products, and services (American Airline Newsroom, 2014) American Airlines Group has been quick to point out the benefits this merger has for travelers.
The airline provides the following list of things it has done for travelers since January. Two examples of those effects now that the merger has been completed are; The opportunity to earn and deem AAA advantage miles when flying on American or US Airways, with all eligible travel on either airline counting toward elite status qualification in the program of your choice. Select reciprocal benefits for elite status members when flying airline, including first and business class check-in, complimentary checked bags, and priority security and boarding (Carrey, 2013). Ill. Examine the organizational structure that has resulted from the merger or acquisition.
Analyze the major differences between the resulting company and the original two (2) organizations. American/US Airways new organization structure has changed compare to original two organizations structure. The initial leadership team is primarily made up of US Airways leaders; the split is now much more even in the UP/ Managing Director ranks. All the top group positions such as EVE people communication Group, COO -Operation group, SCOFF- finance group, EVE corporate affairs group, President-Revenue and marketing group were all taken by US Airways folks while position such as commercial group, chief Marketing Officer and Sales are taken by American Airline folks (American Airline,2014).
Major differences between the resulting company and original two organizations are; first, the numbers may show a balance between AAA and US personnel, in each group the head leader is from US. In other words, the top positions are highest percentile US Airways. Also, there are a lot of VSP and Meds now, because this is now the world’s largest airline with 100, 000 employees. Second, there is a gradual culture shift, where some American Airlines employees already noticed a more relaxed atmosphere in the meetings he’s had with the new management team. American Airlines had a reputation for a long period of time of being uptight and old-school, It feels like the new executives are going to be more people-centric, a little bit more relaxed. (Mason,2013) IV.
Determine whether or not the human resources management practices of the company were modified to reflect the outcome of the merger or acquisition. If no changes were necessary, speculate on the reasons why they were not. Provide a rationale for your response. The human resources management practices of American Airline group were slightly modified to reflect the outcome of the merger. For example, American Airlines’ employees will be able to travel for free in coach class on NY flight in the worldwide network, the new program also will give employees’ registered family members and parents unlimited travel privileges and they won’t have to use buddy passes.
Pre-merger American employees will no longer have to wait until age 55 for retiree travel if they meet the qualifications. Also employees of the new American will benefit from being part of a company with a more competitive and stronger financial foundation, which will create greater career opportunities over the long term (American Airline Newsroom, 2014). Alignment of pay, benefits, work rules and other guidelines for employees of OTOH airlines will be phased in over time so that all changes can be carefully considered. Represented employees will continue to work under their respective Collective Bargaining Agreements, with the modifications provided under the negotiated Memoranda of Understanding for certain groups.