Should Southwest solve 737 MAX problem with an acquisition?

Should Southwest solve 737 MAX problem with an acquisition?

On Behalf of | Nov 1, 2019 | Mergers & Acquisitions |

Business decisions should be made with a specific goal in mind. Oftentimes, this goal is simply to increase one’s client base and profits. While market research and development can play a major role in making these decisions, sometimes businesses have to make decisions in response to the changing market landscape. Sometimes these choices can mean the difference between staying alive and floundering.

Southwest Airlines may be in that position now. The airline is struggling to cope with the continued grounding of Boeing’s 737 MAX. Southwest currently has 34 of the planes and expected to receive another 41 in 2019 alone.

While Southwest sought to acquire more of these planes due to their fuel efficiency, the grounding of all 737 MAX planes has forced Southwest to cancel about 200 flights every day, and its plans to expand its operations have been put on hold. As a result, the airline may now be in a position where it needs to take action to stay alive and competitive in the marketplace.

One option would be for Southwest to engage in mergers and acquisitions. Other airlines, such as JetBlue, only operate Airbus planes, which is Boeing’s biggest competitor. JetBlue also operates in areas of the world that compliment Southwest growth strategy. Only time will tell if Southwest chooses to engage in mergers and acquisitions, though. It may wait longer to better determine the 737 MAX’s future before moving in that direction.

Regardless of what actually happens, this example highlights how mergers and acquisitions can serve as business solutions to complicated problems. As beneficial as they may be, these business moves can be highly complicated, and they are only as good as their agreed-to terms. For this reason, those considering pursuing a merger or acquisition should think about consulting with their business law attorney.