Case Study : Southwest And Jetblue

1078 Words Jul 28th, 2016 5 Pages
From studying the various financial reports of both Southwest and JetBlue, we would recommend that both companies proceed with the merger. While Southwest has more liquidity and will be financially stable upon paying their debt in 2021, JetBlue has a less favorable debt to equity ratio (Morningstar.com). However, given the combination of their assets we believe both companies can benefit from the opportunity to pool resources and drive down operational costs. The merged company would gain a great competitive advantage over other low cost airlines such as Frontier, Spirit, and Allegiant Air. The merged company would benefit from being able to use more routes and gates, which would lead to higher margins with which the company could employ various strategies. Both companies would come together and benefit from the horizontal relationships within the industry. They would be able to leverage core competencies and pool negotiating power to produce greater revenues and help the company grow. Merging companies can be very difficult; there will need to be many goals, and careful analysis of how these goals are being achieved, over the next five years to determine how successful the merger has been. The merged company should focus on “smart” goals through two strategies to help the company operate profitably. First, the merged company should focus on an overall low-cost leadership strategy. Both companies strive to bring low cost flight to the market and they must converge…

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