American Airlines and US Airway’s Merger Essay

AbstractAmeri buns Airlines has stayed tremendous profit losses over the last few years. The losses need been so nifty that the company filed Chapter 11 bankruptcy. The news for the Chapter 11 bankruptcy protection was a concussion to more another(prenominal), considering the fact that they had enough money to operate and cover their losses through the following year. The nuclear fusion indeed was great decision on behalf of American Airlines. The merger itself was question subject. The Department of judge filed a lawcausa against regarding concerns that it could bid wrongs for consumers. A settlement was reached and the existence largest skyway has been formed.American Airlines has been suffering for many years. The company has suffered more(prenominal) losses than profits. Jobs get hold of been cut benefits study been scaley back, and the pilots of American Airlines be paid a lot lower salaries than their competitors. many another(prenominal) of them have been furloughed. All of these and many other factors have contri stilled to American decision making to create the world largest air lanes with US air ducts. In this essay I volition discuss the fate that resulted in the merger, assess the significant positive (or negative) set up of the merger, and examine the organizational structure that has resulted from the merger. American Airlines filed for bankruptcy in November 2011. match to an interview with Richard Quest of CNN, Thomas Horton the new chief operating officer of American Airlines state that the company was forced into bankruptcy because of the cost disadvantages it faced comp argond to its competitors that had already gone through a bankruptcy. The news came as a shock to many. The company had enough moneyto sustain the losses that it may determine through the next year.Although the company had the money to operate, the company still unflinching to go through with filing for bankruptcy (Isidore & Ellis, 2011). At on e clipping American was the world largest carrier, it had dropped to third in the recent years. The company has account only one quarter where a profit was made since 2007, and befogged 4.8 billion over those three and a half years. The company was communicate to continue to suffer losses. at one time that the merger has been approved, American depart be able to get themselves out of their Chapter 11 bankruptcy protection (Isidore & Ellis, 2011). Now that the merger is complete, the new American Airlines has ordered over 600 new aircrafts that are updated and more modern. The new aircrafts will aloneow them to compete with their competitors. In the past times they have lost a great deal of money from their clientele class travelers due to their lack of the amenities that their competitors carry on their aircrafts (American, US air hoses reach merger deal., 2013). The two joining airlines will offer over 6,700 daily flights to 336 destinations in 56 countries.The merger will not suffering any of the hubs presently served by American Airlines and US Airways. American Airlines has been in bankruptcy for a little over a year, and the merger will be effected pursuant to a plan of reorganization chthonic Chapter 11. The combination of American and US Airways brings together two highly complementary networks with access to the best destinations around the globe and gives us a inviolate platform to provide our customers the most connected, comfortable travel experience available, Horton tell The operational and financial strength of the combined airline is expected to alter continued investment in new products and technologies and will create evoke new opportunities for our people, even as we deliver strong cash execute and sustainable profitability. (American, US Airways reach merger deal., 2013). The merger with Us Airways allowed American Airlines to come out of the Chapter 11 bankruptcy in December. Being able to do so was the commencement exercis e time that a major airline has been able to satisfy a bankruptcy with a return on equity for its shareholders. By deciding to partner with a smaller, but stable US Airways, the company was able to raise the value of the combine stock. consistent to the plan of reorganization, so-called double-dip, single-dip, and intercompany claims were settled through a delivery figure out which distributed the proceeds of America Airlines estate based on thetrading price of the new companys common shares.This quick fix termination lessens the opportunity of appraisal disputes by guaranteeing creditors got a current market value. When it was all said and done, American Airlines creditors, including its unsecured creditors were given payment in full. For the first time in a major airline reformation, shareholders were able to film a return on their equity. The approved stock exchange merger left American Airlines shareholders with 72% of the new company and the US Airway investors with the li ngering 28%.US Airways decided to do what most company who are going through a merger wouldnt. They negotiated with American Airlines unions before finalizing the merger. This realized a foundation of a cooperative negotiating agreement for the new company, so that labor disagreements would not disrupt or lengthen the merger development. succeeding(a) numerous noteworthy airline merges it was predictable that the formation of one of the worlds largest carriers would raise some anti-trust hurdles. The first curtailed from the US government. The airline seized a proactive tactic, agreeing to surrender some of it apertures at airports around the US, leading to courtroom approval of the merger (Thomas, 2014).Although the two companies have merged and are de jure one entity, they have both agreed to operate separately until they can integrate both systems successfully. As with any merger, both sides will suffer losses of their employees. Majority of the top leadership positions will b e held by US Airways top executives in the new American Airlines. US Airways CEO Doug Parker will head the merged carrier. Of the top eight executive positions, basketball team of those positions come from the US Airways side. American CEO Tom Horton will be the chairman of the board, and will continue on through until the first conflict of the new board next year. Parker will keep the executives that he is more familiar with. The new leadership team includes US Airways President Scott Kirby and others who have worked a keen-sightedside Parker for several years (American and US Airways name merged airline leadership, 2013). American Airlines has suffered tremendously over the last few years.Us Airway which is a smaller company, was in a better position financially than American. Although Us Airway was more stable, they didnt have access to many of the locations that American Airlines did. The merger was a great idea for both. American was able to get out of their Chapter 11 bankru ptcy protection earlier than anticipated. They have switched over from the StarAlliance and move to One world spherical alliance. The new company now has over a 100,000 employees worldwide. Nothing but positive results seems to be coming from the merger of the two. In the beginning, the merger was questionable, and the Justice Department along with six other states filed a lawsuit against the company. The former for the lawsuit is that they were in fear of the creation of the world largest airline peak prices on travelers. The slight raise in ticket sales, fees for flight changes, make up ones mind bags, would be detrimental to consumers.American Airlines and US Airways were able to settle the suit and bring everyone to ease. In summary, the merger has run smoothly thus so far and according to plan. Currently both companies are operating respectively although they are legally identified as one entity. The companies are functional to collaborate their systems together as well. At the point in time, they are honoring each others flier miles and plan. Some of them have been eliminated to coincide with the polices of the company. American Airlines decided to merge with Us Airways to regain its placement as the world largest airline. The reason for the merger has been negative on Americans side, but will benefit their company in the long run. In my essay, I have attempted to explain In the circumstances that resulted in the merger, assess the significant positive (or negative) effects of the merger, and examine the organizational structure that has resulted from the merger.