American Airlines companies, United Airlines and U.S Airways are conducting merger negotiations, which if and when take place, will create the second largest airline company in the U.S . According to the New York Times, This is the third time in a decade in which the two companies are trying to reach agreement on terms of a possible merger between them.
Second largest airline in the U.S?
According to a report in The New York Times the merger is an attempt to help the U.S. airline industry, which lost 60 billion dollars over the last decade. If the merger will take place, the new company will be the second largest airline in the U.S.
The report said that the merger is designed to jump-start if possible the U.S. airline industry, which lost 60 billion dollars over the last decade due to soaring fuel prices and a drop in passenger rates. Both companies expressed the willingness in recent years to strengthen public cooperation.
The problem is that mergers in the airline industry are a difficult task to perform, mainly due to the fact that the complex labor contracts of employees in each company can lower the value achieved in sweeping cost reduction. The merger between Delta Airlines and Northwest Airlines took two years to achieve, but ultimately created the largest airline in the U.S.. Now in the company’s labor contracts U.S Airways focus of controversy, since US Airways still has not integrated pilot seniority since its merger with America West in 2005. The labor issue could turn out to be the biggest hurdle to overcome in any merger with United Airlines.
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The CEO Game
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