The Complexities of Post-Merger Integration: Learning from the Airlines Industry

For those looking for a master class in the complexities of post-merger integration (PMI), the airlines industry provides countless lessons.

19 October 2015

For those looking for a master class in the complexities of post-merger integration (PMI) there’s no shortage of case studies from which to learn. In fact, a neophyte on the topic could ramp up their knowledge base pretty quickly by focusing their research on a single industry: the airlines.

The spate of airline mergers over the past decade has provided countless lessons in merger integration — highlighting both the good and the bad outcomes associated with this multifaceted process in change management.

There are several reasons why the aviation industry offers up such interesting illustrations of integration:

  • There are many to choose from. American Airlines joining forces with US Airways is just the latest example. There are several high profile deals in the airline industry that are instructive: United merging with Continental, Delta combining with Northwest, and Southwest’s acquisition of AirTran.
  • These are big deals. I’m stating the obvious here but there are billions of dollars at stake in these transactions, so the exposure level is high and any missteps are magnified. American Airlines and US Airways announced their combination in February 2013, and three years later, Wall Street analysts continue to closely track the progress of integration milestones.
  • The challenges are easy to understand. There are plenty of questions that you could easily discuss with an 8 year old: What brand name do you keep? Do you use the same logo? Will the gates be close together at the airport? Will pilots be able to fly the other airlines planes? There are lots of issues on the table that aren’t easy to resolve — but easy to have a conversation around.
  • The results are varied. By all accounts, American Airlines has met most of the significant operational and technical objectives related to their merger. On the other hand, United and Continental were plagued with problems related to the combination of their reservation systems — resulting in cancellations, delays, and ensuing brand deterioration.
  • We all feel the impact. If a large steel producer fails to deliver on a PMI milestone, we’re generally none the wiser — and it’s probably not grabbing front page headlines. If things don’t proceed smoothly in combining airline loyalty programs or extra baggage fees,all of us pay attention.

The consolidation in the airline industry will hopefully benefit us as consumers through economies of scale and more efficient operations; it certainly has provided business schools across the country with a deep catalog of potential course curriculum.

Ben Collins

Ben Collins

As Director of Strategy and Product Marketing, Mr. Collins is responsible for driving the growth of Intralinks’ Corporate Development platform, including the company’s offerings for facilitating both buyside and sellside transactions.