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Analysis of mergers and acquisitions in the airline industry - Learning from investor reactions

Author

Listed:
  • Biel, K.
  • Ellenrieder, D.
  • Kiesel, F.
  • Ries, J. M.

Abstract

Over the past 15 years, the airline industry has been in constant transition. This can mainly be attributed to an ever-increasing competitive pres- sure, which has additionally been intensified by the continuing growth of low-cost carriers and the upcoming of the Gulf airlines. As a consequence, airlines which are not capable of streamlining their operations sufficiently often struggle with this competitive environment and may become targets for mergers and acquisitions. However, as has been shown for various transactions in the past, the expected syn- ergies do not necessarily materialize over the course of the integration process. Therefore, this article aims at investigating the performance of mergers and acquisitions in the airline industry between 2001 and 2015 using the share prices reactions following merger and acquisition announcements as a proxy of the present value of future cash flows to shareholders. The results support findings of previous studies that measured a positive wealth effect accruing to the acquirers’ shareholders due to the announcement. Furthermore, it reveals significant cumulative abnormal average returns for domestic transactions with alliance non-member acquirers and a considerable positive impact of high EBIT margins.

Suggested Citation

  • Biel, K. & Ellenrieder, D. & Kiesel, F. & Ries, J. M., 2016. "Analysis of mergers and acquisitions in the airline industry - Learning from investor reactions," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 84342, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    • Handle: RePEc:dar:wpaper:84342
    Note: for complete metadata visit http://tubiblio.ulb.tu-darmstadt.de/84342/
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