American Airline Us Airways Merging Essay

880 words - 4 pages

Merging of the American Airlines with the US Airways

Merging of the American Airlines with US Airways created the largest merge of its kind in the year 2013. The merge was in the tune of $17 billion (Karp 1). The newly formed airline company from this merge is hence the largest airline operating on earth. The newly established airline corporation is officially referred to as American Airlines as it chose to inherit the name from the former American Airlines.

Why the Merge?
The major point of focus, which these two companies are trying to do by merging, is to establish the largest airline network that would be very influential in the airline market. The newly established American Airline has the capacity of operating 6,700 daily flights and this makes it the most prominent and influential global airliner (Karp 1). Its operating presence in more than 50 countries worldwide adds to the network it intends to establish. The 6,700 daily flights make it presence prominent across all the 330 destination points it operates in worldwide.
Another thing which American Airline is trying to do is to be the best. According to the newly established CEO, he said that it feels good to be the best and that is what the merge is trying to restore (Karp 1). American Airline is destined to be the airline of choice for all air travelers irrespective of whether they are on business trips or vacation holidays. However, using their wide established network, the new company is trying to target corporate clients, who travel often and account for a large portion of airline business.
Before the merge, the former American Airline was struggling with bankruptcy and this was due to large costs involved. Thus, as the two former companies want to cut down operating costs, the former American Airline is, in addition to this, trying to rescue itself from bankruptcy.

The benefits accrued to this merge are incredible. Firstly, the large network established by the company positions the company in a better place to compete effectively for corporate clients (Karp 2). This is because the large network brings convenience of corporate clients being picked from anywhere to their point destination and back without extra costs being incurred.
The merge also brings the resources of the two companies together. Integration of these resources helps in pushing operating costs down. This is first evident from the fact that the new company now has one CEO. This makes experts conclude that the airfares will remain fairly same or go down instead of rising. This does not though underscore the fact that the new airline is the major determiner.

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