Reasons of merger of ba and iberia
There are lots of resources available (and a video clip to follow) for an interestingbusiness merger case study. What factors have encouraged BA and Iberia to merge?What will it mean for the firm and for its customers?Both firms have had a miserable time over the last few years and stacked up heavylosses. And these two firms are not alone ± the International Air Transport Association,an industry body, estimates that total losses for the world¶s airlines this year will besome $11 billion. The credit crunch has hammered ticket sales (especially of premiumpriced Business class tickets) and fuel has been expensive. By agreeing to join togetherthe two firms will join the trend for big European airlines to grow through mergers.The first motivation is probably cost savings: the pair reckon that by the fifth year thenew group will save some ¼400m annually by cutting overlapping routes, and bycombining maintenance, office functions and business-class lounges. The pair may alsohave more muscle when it comes to negotiations to buy new planes from Boeing andAirbus. You would group these ideas together under the heading of economies of scale
.What problems lie ahead? According to reports, Iberia¶s cabin crew have just finishedone round of strikes and are promising more in a dispute over changes to their jobs.BA¶s attempts to cut cabin crew and freeze pay could also result in strikes overChristmas. Ground staff and pilots are equally willing to use