Findings
The new company will be split 45% to Iberia and 55% to British Airways and will be based in Madrid, Spain[5]. As I mentioned earlier, this means that both of airlines will benefit in terms of overall business and it is a way to help each other to turn red figures into black figures and to compete with budget airlines. (not very important)
This will bring both airlines into the world of sharing which results in everything being shared e.g. ground staff, maintenance, and offices. this allows flexibility for passengers and cost saving. Despite it being a good benefit of both airlines, job losses have been a major concern from the result of merger. British Airways have cut thousands from its workforce like Iberia because the merger has meant that not as many people need to be employed[6]. These concerns may lead to a problem in the workforce for example a lack of motivation, working too many hours as well as other concerns. (you mentioned in analysis and discussion already)
Mergers between two airlines provide many benefits including economies of scale, International competition, greater investment and greater efficiency.[7] The purpose of Economies of scale is to reduce the average or unit costs as an organization grows in size (internal), or as the industry in which an organization operates grows, and/or concentrates in a geographical area (external)[8]. The main economy of scale is technical economies where the average price per unit falls due to the fact that they don't need to duplicate things as a result of the merger, with a number of costs decreasing in the administrative section as the firm merge operations in a London based office. This will give the airlines the go ahead for a joint transatlantic venture in which marketing, ticket sales and operations can effectively[9] be merged with American Airlines. It is a big step along the way to form code sharing. Synergy is the concept of "The whole is greater than the sum of the individual parts"[10]. This means that British Airways and Iberia will be a greater force together than they would be separately.
The new company is likely to be based in Spain, where costs for both labour and land are likely to be cheaper than in the UK. There will still be some offices based in London, looking after the financial and administration side of the business. ( I think you don't need to include this)
Analysis of findings
After analyzing the SWOT[11], we can see the merger has enabled both companies to expand their worldwide opportunities and it potentially removes the overcrowding issues at Heathrow and Gatwick airports although terminal 5 has already helped solve this problem. For Iberia there are also many benefits from the merger for example, they are able to reduce their costs, improve their brand image, increase their network and fulfill the opportunity of a strategic alliance. The threat of bankruptcy has become even more problematic for Iberia with the global increase in fuel prices and the growth of budget airlines. This shows how the merger of British Airways and Iberia has helped them to eliminate their weaknesses and exploit certain opportunities.
The merger can help BA overcomes their main weakness "Britishness" as having a strong British identity can be resented by some European customers and being associated with Iberia may will attractive them. For Iberia, having the merger with BA can mean gaining access to their routes and increasing its market share as Iberia used to have a very limited network.
The advantages of this merger are its economies of scale. As we know BA is the largest airline in UK and has its main hub at Heathrow Airport, the world's busiest airport and many other airports e.g. Gatwick, Manchester and Newcastle. Therefore, it has significant fixed costs so both would have lower average costs if they merged. As they share the company they can buy necessary accessories due to bulk buying, this will reduce costs. There will be better rate for large companies in financial areas and also organizational problems will be much easier to solve due to having one head office rather than two.
Find out more from UK Essays here: http://www.ukessays.com/essays/business/impact-of-british-airways.php#ixzz3P8Lumop7
Findings
The new company will be split 45% to Iberia and 55% to British Airways and will be based in Madrid, Spain[5]. As I mentioned earlier, this means that both of airlines will benefit in terms of overall business and it is a way to help each other to turn red figures into black figures and to compete with budget airlines. (not very important)
This will bring both airlines into the world of sharing which results in everything being shared e.g. ground staff, maintenance, and offices. this allows flexibility for passengers and cost saving. Despite it being a good benefit of both airlines, job losses have been a major concern from the result of merger. British Airways have cut thousands from its workforce like Iberia because the merger has meant that not as many people need to be employed[6]. These concerns may lead to a problem in the workforce for example a lack of motivation, working too many hours as well as other concerns. (you mentioned in analysis and discussion already)
Mergers between two airlines provide many benefits including economies of scale, International competition, greater investment and greater efficiency.[7] The purpose of Economies of scale is to reduce the average or unit costs as an organization grows in size (internal), or as the industry in which an organization operates grows, and/or concentrates in a geographical area (external)[8]. The main economy of scale is technical economies where the average price per unit falls due to the fact that they don't need to duplicate things as a result of the merger, with a number of costs decreasing in the administrative section as the firm merge operations in a London based office. This will give the airlines the go ahead for a joint transatlantic venture in which marketing, ticket sales and operations can effectively[9] be merged with American Airlines. It is a big step along the way to form code sharing. Synergy is the concept of "The whole is greater than the sum of the individual parts"[10]. This means that British Airways and Iberia will be a greater force together than they would be separately.
The new company is likely to be based in Spain, where costs for both labour and land are likely to be cheaper than in the UK. There will still be some offices based in London, looking after the financial and administration side of the business. ( I think you don't need to include this)
Analysis of findings
After analyzing the SWOT[11], we can see the merger has enabled both companies to expand their worldwide opportunities and it potentially removes the overcrowding issues at Heathrow and Gatwick airports although terminal 5 has already helped solve this problem. For Iberia there are also many benefits from the merger for example, they are able to reduce their costs, improve their brand image, increase their network and fulfill the opportunity of a strategic alliance. The threat of bankruptcy has become even more problematic for Iberia with the global increase in fuel prices and the growth of budget airlines. This shows how the merger of British Airways and Iberia has helped them to eliminate their weaknesses and exploit certain opportunities.
The merger can help BA overcomes their main weakness "Britishness" as having a strong British identity can be resented by some European customers and being associated with Iberia may will attractive them. For Iberia, having the merger with BA can mean gaining access to their routes and increasing its market share as Iberia used to have a very limited network.
The advantages of this merger are its economies of scale. As we know BA is the largest airline in UK and has its main hub at Heathrow Airport, the world's busiest airport and many other airports e.g. Gatwick, Manchester and Newcastle. Therefore, it has significant fixed costs so both would have lower average costs if they merged. As they share the company they can buy necessary accessories due to bulk buying, this will reduce costs. There will be better rate for large companies in financial areas and also organizational problems will be much easier to solve due to having one head office rather than two.
Find out more from UK Essays here: http://www.ukessays.com/essays/business/impact-of-british-airways.php#ixzz3P8Lumop7
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