There’s a good article today in the Atlanta Journal-Constitution about value of airline mergers. The AJC focuses on lessons for its hometown airline, Delta. It confirms what I wrote on January 17, exposing the flaws in the US Airways-America West merger obscured by Wall Street’s enthusiasm. Some key points:
- “Mergers often look good on paper – and can boost shareholder profits in the short run – but the successful union of two geographically and culturally different airlines saddled with their own problems isn’t guaranteed.”
- “US Airways, though, suffered more fundamental problems. International flights – the biggest moneymakers and the industry’s future – account for only 20 percent of US Airways’ business. And customer service took it on the chin: lost reservations; delayed flights; long check-in lines.”
- “‘It was absolutely one of the messiest operations I’ve ever seen,’ [airline consultant Mike] Boyd said. ‘A merger does not enhance customer service; it makes it more difficult. Passengers pass on their problems to every employee they meet. That makes their job harder. That’s another reason why a lot of these alleged synergies don’t exist.'”
- “[U]nions representing pilots, mechanics, ramp and baggage handlers and flight attendants remain contract-less more than two years after the merger was announced. Dueling, east-versus-west pilots’ unions, in particular, trouble investors.”
Read the whole thing.
US Airways’ saga offers cautionary tale for Delta merger [Atlanta Journal-Constitution via Today in the Sky]
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