Discussion Week 2 Hrm 578

Growth was the main reason for the Southwest Airlines acquisition of AirTran and Delta merged with Northwest Airlines. Southwest began to absorb AirTran's route by turning into a more expansive Southwest network and making its first international flights once it absorbed those routes into the Southwest brand. Although it wanted AirTran's routes, Southwest wanted to maintain an all Boeing 737 fleet. To unload the Boeing 717 aircraft inherited from AirTran, Southwest leased all 88 of them to Delta Air Lines (NYSE:DAL).

Delta had used mergers and acquisitions (M&A) successfully to solidify its strong position as a leader in the airline industry. It had gone through five M&As since 1953, including the most recent acquisition of Northwest Airlines (Northwest), which turned Delta into an airline with major operations in every region of the world. On the other hand, the Northwest merger took a toll on Delta’s financial position by contributing to its high long-term debt.

According to the text book, Mergers can give the acquiring company an opportunity to grow market share without having to really earn it by doing the work themselves - instead, they buy a competitor's business for a price. Both airlines did pretty well by the deal since Southwest was able to find a use for the planes while Delta got larger aircraft at reasonable prices to replace smaller regional jets.

reference; Ian Palmer. (2008). Managing Organizational Change, 2nd Edition. [devry]. Retrieved from https://devry.vitalsource.com/#/books/0077587448/

 Park, S. (2017). A merger effect on different airline groups: empirical study on the Delta-Northwest merger in 2008. [online] Available at: http://www.scielo.br/scielo.php?script=sci_arttext&pid=S2238-10312014000200004 [Accessed 8 Mar. 2017].

Forbes.com. (2017). What Has AirTran Done For Southwest Airlines?. [online] Available at: https://www.forbes.com/sites/greatspeculations/2014/12/11/what-has-airtran-done-for-southwest-airlines/#6d7142a05917 [Accessed 8 Mar. 2017].