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National Research University Higher School of EconomicsStudent ThesesThe Analysis of Mergers and Acquisitions of Airline Companies with Negative Profit

Student
Title
Supervisor
Faculty
Educational Programme
Final Grade
Year of Graduation
Vladislav Loshakov
The Analysis of Mergers and Acquisitions of Airline Companies with Negative Profit
Economics
(Bachelor’s programme)
2017
This work shows M&A deals between largest airline companies of the USA: Delta Air Lines, Northwest Airlines, Continental Airlines, United Airlines, and American Airlines. All these companies have negative profit before the transactions.

Research object is mergers and acquisitions deals of companies with negative profit. Research subject is performance indicators of the companies involved in the transactions.

Aim of research is assessment of mergers and acquisitions between the six largest airline companies of the United States (the five listed above and US Airways with positive profit).

In order to achieve our aim we have to complete the following tasks: description of mergers and acquisitions transactions, possible goals and motivations; searching for the indicators by which the classification of transactions can be determined and finding ways to calculate these indicators; demonstration of the specifics of the effect evaluation of transactions among companies with negative profit; description of the peculiarities of air transportation market and interaction of its companies; description of causes and consequences of the crisis in the United States airline industry; demonstration of transactions between the largest US airline companies and the use of tools to assess these transactions.

The evaluation of the actual data of new firms shows that two of the three companies have a positive investment value after the deals, and that negative trends in their financial statements decrease.

It is important to note that the deals take place at an important moment for the US air transportation market. The decline in demand after the attacks of September 11, 2001 is over, and oil prices are much smaller soon after the deals, which leads to a drop in the cost of aviation fuel. This challenges the influence of the mergers of companies on their financial result and makes us think about the idea that airlines operate in more favourable conditions.

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