In last week’s P3 ExPand video I talked about the recent announcement of the British Airways (BA) merger with the Spanish airline Iberia. Some form of merger had been discussed on and off since they held talks in the summer of 2008 but now it’s looking like there could be some movement on this.
Students of Paper P3 will be aware that Johnson & Scholes argue that when evaluating strategic options, 3 major areas should be considered. Namely, is it suitable, is it acceptable and is it feasible?
The aviation industry is extremely competitive. In the current economic environment it is safe to say that the merger would help both companies in terms of synergies and hence from a suitability point of view it appears to work.
This issue of acceptability would need to be examined in the context of the key stakeholders of the firms. BA is quoted on the London stock exchange so some key stakeholders would be some of the big shareholders. The share price rose by 7% following the announcement so the shareholders appeared to like the news.
The final area is that of feasibility. An important issue from the feasibility point of view is whether it would get regulatory approval from the European Commission.
It’s suitable, it’s acceptable but is it feasible? Let’s wait and see what develops.