American Airlines and the US-airways Merger

American Airlines and the US-airways Merger
Name
UniversityIntroduction
In business, competition benefits some of the corporations while adversely affecting others. When corporations compete with each other, they may all suffer especially in the events of unfair competition. The prices of goods and services may fall because of competition, thereby affecting the profitability of both or one of the firms. Since firms are of different sizes, the small firms are the most adversely affected by competition because the large firms enjoy economies of scale. When firms in the same industry are both affected by competition in a negative way, mergers and acquisitions arise. A merger is the situation when two or more initially different corporations combine to form one larger firm with common aims and objectives. On the other hand, acquisition involves a situation where one firm acquires another to dissolve one of the companies and retain one as the parent company. One of the mergers that has been formed and is of interest is in the air transport industry. The merger has been formed by the American Airlines and the US-airways and a court approval has been issued. The essay is an analysis of the merger between American Airlines and the US-airways.
American Airlines and the US-airways Merger
A bankruptcy court approved the merger between the American Airlines and the US-Airways (South China Morning Post Publishers Ltd, 2013, p. 1). This has led to the formation of the largest airline in the world. However, the court did not approve all the terms in the merger agreement of the two companies. For instance, one clause that required Tom Horton, the outgoing chief executive of American Airlines to pay a severance package of $ 19.9 million was not approved. The US-Airways has its History based on the All-American Aviation (AAA), initially operating in Pittsburgh and Ohio River Valley. The name of the corporation changed to All-American Airways in 1949. When the company switched operations from airmail to passenger services, the name changed to Allegheny Airlines in 1953. In 1979, the name of the company changed to US-Airways. This shows that significant changes have occurred in US-Airways throughout history. American Airlines began in 1920s. The company started because of the activities of Robertson Aircraft Corporation based in Missouri, which held airmail contracts in the United States. Robertson Aircraft Corporation combined efforts with other small corporations to form the American Airlines. The merger between the two companies is therefore a combination of powerful forces in the air transport industry.
Cash was a major factor that facilitated the two corporations to merge. American Airlines was the firm most adversely affected ...