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Advisor(s)
Abstract(s)
Not that many inventions are considered to be so life changing as the airplane invention. The
airline industry is by far one of the most competitive industries with the highest growth
expectations in the world. Nowadays, the sector of air transportation is radically different from
what it was prior to 1978. As a consequence, the sector witnessed a massive restructuring with a
significant increase in M&A activity. For this reason, the merger between American Airlines and
U.S. Airways – two U.S. companies, will be the focus of this dissertation. Taking into account
the industry and firm’s conditions and potential, the estimated synergies were valued at $984
million for the first relevant year - 2013, including revenue growth and cost savings. The overall
synergies will yield a final equity value of $27.897 million that represents an increase of
approximately 71,2%, when compared with the sum of the standalone equity values of both
companies. This deal is suggested to be an all-stock deal that leads to the issue of 236 million
shares to U.S. Airways shareholders and, as a result, American Airlines stakeholders will own
65% of the new company and the remaining 35% will be owned by U.S. Airways shareholders.