Reference no: EM132172086
Case Study - Mergers in the airline industry
Recently, British Airways merged with Iberia, and Air France merged with KLM. Both mergers resulted in some significant benefits.
Ryanair plans a £560 million takeover of the Irish airline, Aer Lingus, which has failed to deliver shareholder dividends. One shareholder, the Irish government, owns 25 % of the shares of Aer Lingus.
Ryanair's chief executive officer (CEO) said that the proposed takeover could:
create revenue and a positive return for the Irish government by selling its shares create a strong Irish airline capable of competing with major European airlines.
This form of external growth is also occurring in the United States (US). American Airlines and US Airways will merge, forming the nation's biggest airline, to be called American.
1a. Describe one difference between a merger and a takeover.
1b. Define the term economies of scale.
1c. With reference to the airline industry, explain two differences between external growth and internal growth.
1d. Examine the Irish government's decision to own 25 % of the shares of Aer Lingus.
1e. With reference to one internal stakeholder and one external stakeholder, discuss the statement that "larger is not always better"
from the perspective of the airline industry.
Attachment:- Case Study.rar
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