Why Does a Merger Fail? A Case Study on Air India and Indian Airlines Merger
The two national carriers of India (Air India and Indian Airlines) merged in 2007, to fulfil certain goals but, failed to achieve the desired result. The merged company faced numerous financial and operational problems after the completion of the merger. Before their fusion, both the companies aimed to become one of the biggest airlines in the Indian as well as international skies. This wishful thinking suffered financial instability, human resources issues along with operational inefficiencies as soon as the merger completed. Several factors (financial/non-financial, company related, industry related) played negatively for the defined deal and changed the result of the entire merger game. This case study describes the motives behind the deal and the procedure of the deal and also explores the achieved synergies along with the anticipated synergies. It can be used to analyse the success and failure factors of M&A. Besides the above, this case study can be used for discussing whether the transaction between Air India and Indian Airlines was a failure or success?
Prerequisite Conceptual Understanding (PCU)/Before the Classroom Discussion
Before studying and analysing the case, the students/participants should have a prior knowledge regarding M&A, motives behind M&A, trends of M&A in different sectors and industries. Sound knowledge on the aviation industry will make the learning even more interesting. The students/participants or case readers can visit several websites to gather information on Air India and Indian Airlines. News articles regarding the deal can provide significant insights for the better analysis of the case. The students/participants can also be asked to go through the annual reports of Air India to analyse the year-wise financial performance of the pre and post-merger scenario of the company.
Case Positioning and Setting
This case study can be used in the BBA, MBA and Executive MBA program in “Corporate Restructuring Course” or Merger and Acquisition Course” – To get a basic idea regarding the concept and motives of M&A, factors affecting M&A and problems facing by companies at the time of M&A. This case study will be also helpful in improving the analytical skills of the students.
I. What were the important reasons that lead to the merger of Air India and Indian Airlines?
II. Determine the company related, industry related, financial and non-financial factors those had their impact on the merger of Air India and Indian Airlines?
Preamble to the Case Study Analysis and Suggested Orchestration
This case study provides an opportunity to understand the reasons or motives behind M&A deals along with the problems faced by companies after the deal. The factors affecting the transaction and the financial ratios to measure the performance of the companies can be learnt from this case study. Students can get ideas on the industry specific (Aviation Industry) transactions from this case study. This case study analysis can be carried out as mentioned in Exhibit (TN)-I...........