Executive Summary 1. Introduction This comparison between American Airlines (AA) and US Airways

2900 WordsApr 23, 201912 Pages
Executive Summary 1. Introduction This comparison between American Airlines (AA) and US Airways (AWE) starts from the year ending report in 2008 after AWE finally completed embedding America West into their operations in October, a process begun in 2005. Neither has taken part in any mergers or takeovers since then and, despite AWE briefly flirting with the idea of taking over United Airlines in 2008, merger and acquisition plans for both had been subordinate to recovering from the Global Financial Crisis (GFC). They have been operating as passenger and freight carriers, albeit under different corporate identities, since the beginning of commercial aviation in the 1930’s. They have weathered the cycles encountered by airlines and…show more content…
Using macro-level analysis, this paper will compare the performance of the two airlines from 2008 until 2013 when they obtained approval to merge and will explain how the smaller AWE was able to takeover AA. 2. Strategy and Positioning Exiting the GFC in 2009, legacy carriers had to contend with the rise of the LCC. AA and AWE were encumbered with legacy staff industrial agreements, a public image of a full-service provider and a massive oversupply of output in the face of weakened demand. They were not able to reposition as leaner, lower-cost airlines: nor reduce services without damaging their corporate image. In ‘Competitive Strategy’ Porter introduced the concept of generic strategies – differentiation, cost leadership and focus (Harvard Business Review, 2011). Using these possible alternative strategic positions to analyse AA and AWE, they clearly fall under the focus strategy; neither was a cost leader in their field, nor did they differentiate their product significantly from other Legacy competitors. They both targeted their business model at the whole market of airline travelers, catering to all classes of the market and delivering a similar product. The saturation of many of their markets by other competitors (both air and land – particularly AWE along the eastern seaboard of the United States), as well as previous mergers and acquisitions, forced the market to become an oligopoly; where one competitor makes a

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