Mergers and acquisitions
: the case of Delta Airlines and US Airways

  • Francisco Braamcamp de Mancelos (Student)

Student thesis: Master's Thesis


Over the last decade, US passenger airline industry faced an extremely adverse period when it comes to profit generation, culminating in significant losses and bankruptcies of several carriers. Within this market, airlines operate under a very demanding and stressful environment. Three main factors are reflective of this specific setting, such as: the existence of unpredictable fuel costs (being the major burden to these firms), the increasing competition forces mainly coming from low-cost carriers and a very economic-sensible air travel demand faced by carriers. Taking into account those industry-specific features, airlines found M&A a strategic tool to increase their profitability by sharing and pooling resources. Ultimately, most recent mega-mergers within this sector are performed aiming at the reduction of capacity in order to strengthen efficiency levels, so the companies can properly weather economic adverse conditions. In this paper, a proposed merger of equals between Delta Airlines and US Airways is analyzed in order to attest a further step on US airline industry consolidation. Simultaneously, the thesis is expected to fill the blanks about how much value would be yielded by combining these carriers not only from a macro perspective, but also assessing how much value would be captured by each party. The paper found that the deal would be supported by the generation of cost synergies due to the fact that both companies have a considerable portion of overlapped business operations, specially reflected on identical routes. Indeed, the final results of the report show that after the combination of both firms – including the net effect of synergies -, the value would be 22.6% higher than the enterprise value of the simple combination of each firm based on their standalone valuations. Despite of such positive outcome, this paper took into account the role of antitrust authorities on the process, which can influence the final result of the deal, due to the fact that, after the proposed deal, the combined firm would get a considerable stake of the market, posing questions at the competitive level.
Date of Award2013
Original languageEnglish
Awarding Institution
  • Universidade Católica Portuguesa
SupervisorPeter Iordanov Tsvetkov (Supervisor)


  • Mestrado em Gestão

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