This article discusses the merger of US Airways and American Airlines in September 2013. The author argues that while the merger was highly controversial, it ultimately benefited both companies by improving their profitability and providing better service to customers.
The american airlines and us airways merger case study is an article that discusses the US Airways-American Airlines Merger.
Insights From The US Airways-American Airlines Merger (Harvard Business Review)
on September 19, 2021 by Gary Leff
This is how a Harvard Business Review podcast frames the debate about the US Airways acquisition of American Airlines:
Leading companies through a merger is a difficult, intimidating, and emotional task. The stakes are very high, and jobs and lives are often on the line. However, if done correctly, the outcomes may result in a joyful conclusion for all parties involved.
The case study Merging American Airlines with US Airways by Harvard Business School professor David Fubini is the topic of debate. Parker talked to Fubini’s students, and the professor seemed a little enchanted. “Certainly, Doug, in this instance since he had been a previous CEO, really utilized many of those techniques [that make for a great top leader] very well,” he concludes the conversation.
Parker did indeed manage to alienate consumers, workers, and shareholders while yet managing to stay afloat. By the way, here’s the version of Parker’s legacy and the merger that he tells himself.
Would you think that the merger’s fleet transfer was just recently completed in May?
Insights Into The Merger Of American Airlines And US Airways
How US Airways management prioritized on-time departures above other factors in the airline’s operations.
As we’ve previously said, the culture of airline management was very different. Customer service was a priority for American Airlines, particularly for corporate customers. It was renowned, for example, for allowing its pilots to keep the aircraft if they thought it was necessary to accommodate a business traveler or a group of passengers arriving on a delayed airline, and so they would hold the plane. The response from US Airways was, “No, we fly when it says we’re going to fly, not a minute later,” because their idea was that they had such a tight network that a 10-minute delay in the morning would grow into a two-and-a-half-hour delay by the afternoon.
Leaders of US Airways believed American was inefficient and made poor business choices, but its route network provided them with enough money to make errors. In general, US Airways executives believed they were wiser than their counterparts in the United States.
I remember a heritage US Airways Vice President telling me on the first flight of the new Airbus A321T aircraft with three cabins that would serve premium cross-country routes shortly after the merger closed that first class will be soon eliminated since it made no sense for the jet. A few years later, the Senior Vice President for Los Angeles (also heritage US Airways) informed me that she was begging for additional first-class tickets to sell.
“Look at those American Airlines folks,” the US Airways personnel would remark. They only care about rich corporate executives who can afford their inefficiencies, and we simply must change this.
…US Airways intended to adapt its airline management style to a larger carrier.
In the interview, Herr Professor makes a few mistakes.
Before American, every major airline, according to Fubini, went bankrupt. While it’s true that American Airlines sat on the verge of bankruptcy for much too long, it’s not true that every major airline followed suit (or at all). Southwest Airlines, the country’s biggest domestic airline, never went to court.
Doug Parker’s claim that he “had been the CEO of US Airways for some time, really, ever since they purchased America West” (emphasis mine) is incorrect. Parker became CEO of America West in September 2001 and acquired US Airways the following month (with financing from a new co-brand credit card partner). It was another instance of a minor airline rescuing a bigger one from bankruptcy, similar to US Airways-American.
In the interview, Fubini gives the tale of letting workers choose the new American Airlines aircraft paint scheme much too much weight.
American Airlines had these famous silver aircraft, and they had chosen to alter the livery, or the airline’s overall appearance. They’d also spent a lot of money on creating the new American Airlines appearance.
“Look, before we go forward with this, let’s put this to a vote of the whole work population,” Doug Parker remarked, and many were surprised since they’d spent a lot of money creating this new livery. “No, no, I want us to check whether this is one airline,” he replied. So I’m going to put it to a vote.” And, of course, the new airline livery was approved, which is why every American Airlines aircraft now has this white appearance with a lot more modern logo.
BRIAN KENNY: The silver appealed to me, but that’s just my opinion.
DAVID FUBINI: I apologize. You would have lost the election.
Parker told employees that he was letting them choose the aircraft livery because it didn’t matter, and the choice wasn’t between “new or old, US Airways or American,” but rather between keeping the new American livery or keeping the new paint job but keeping the old American Airlines tail, which looked terrible. It was a very restricted option due to the expense and the lack of desire to redo the procedure.
While the results were close, it was always anticipated that ‘keeping the new American Airlines livery’ would prevail since American workers regarded it as theirs, and there were more legacy American employees than heritage US Airways personnel.
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