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Mergers in airline industry continue with American Airlines

In an update to a story previously covered in this blog, Louisiana residents may be interested to learn that the merger between American Airlines and US Airways has taken a step forward. The two businesses have formally started engaging in talks, wherein the two organizations will work with one another to determine whether or not a merger is in their best interests. If these talks eventually lead to the merger of the two businesses, the result would be the creation of one of the largest airline providers in the world.

However, to prevent possible business litigation, the airlines need to consider the complexities of mergers. For instance, it's possible that they may infringe upon anti-trust laws. In this case, the two organizations may need to abandon certain routes to comply with federal regulations.

This merger may cause problems, but many individuals think that the only way the two organizations can compete against their competitors is by joining their resources. While American Airlines has entered into discussions with US Airways, its CEO may not agree with the aforementioned assessment. Another potential option is for American Airlines to remain its own entity and receive a cash investment from British Airways. Either way, American Airlines' connection to British Airways' parent company, International Airlines Group, may give its CEO a leg up in the merger negotiations.

As this merger process shows, there are a multitude of issues to consider when deciding to merge with another business. Business owners need to think of the legal hurdles, federal regulations, leadership structures and the potential benefits and downsides of the deal. Anyone considering acquiring or merging with another business ought to look seriously into these issues before taking any steps toward finalizing a deal.

Source: The Washington Post, "American Airlines and US Airways start merger talks; potential deal is still far from reality," Aug. 31, 2012

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