Impact of an Entree into a Strategic Alliance on Airlines' Value

The aim of the academic paper “Impact of an entrée into a strategic alliance on airlines’ value” is to investigate interrelation between airline’s entrée into an alliance and changes of prices of its shares. Market capitalization as an indicator of value of a company is one of the main sources of its managers’ concerns, that’s why the analysis of its changes stays relevant to any market condition. As globalization continues affecting managers’ decisions, there are more and more airlines which are willing to become a member of an international strategic alliance, and a wide variety of research on weather this membership delivers significant benefits to an airline or not achieved controversial results. The tasks of this paper are exploration of the existing literature on strategic alliances, summary of its benefits and risks and analysis of airlines’ market capitalization at the exact moment when news about an airline’s entrance into alliance come out. To fulfill the last task the working paper uses event study to investigate changes of the prices of Air Berlin, Japan Airlines, LATAM Airlines, China Southern Airlines, Aeroflot, Garuda Indonesia, EVA Airlines, Avianca Holdings and Asiana Airlines at the moment of its entrée into “Oneworld”, “SkyTeam” and “Star Alliance”. The study reveals the significance of that changes for eight of the examined airlines and suggests the direction of subsequent research.