Word: merger
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Dates: during 2000-2009
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...want to take on ruinous amounts of risk, but the scale of their operations hindered their oversight. Unsurprisingly, these financial behemoths tend to become unwieldy as they attempt to do too much at once. Consider the case of Citigroup, the product of Citibank’s historic 1998 merger with Travelers, an insurance company. The one-time “financial supermarket” was exposed as a bloated, mismanaged basket case by the financial crisis. Today, Citigroup is selling many of its investment and insurance divisions in an effort to reach a more manageable size and return to profitability...
...after 18 months of circling, it finally landed: British Airways announced its highly anticipated merger with Iberia late Thursday, coupling BA's access to the U.S. with the Spanish carrier's routes to Latin America in one of the biggest deals in aviation history...
...merger, slated for completion late next year, is simple. BA and Iberia - combined annual revenues: $22 billion - are chasing their rivals' tails. Germany's Lufthansa, Europe's second-largest airline, has picked up smaller carriers from Austria to Switzerland in recent months. Thanks to the 2004 merger of the French and Dutch airlines, Air France-KLM is even further out in front. Troubled Iberia and BA, which both announced ugly losses over the past week, reckon eliminating duplicate services from fleet maintenance to business class lounges will save the airlines $600 million a year. That'll mean "a strong European...
...history of airline mergers, though, might suggest otherwise. Success stories - Air France and KLM in Europe; Delta and Northwest in the U.S. - are rare. Of the dozens of deals struck in the U.S. since the airline industry was deregulated in the late 1970s, most are considered flops. "I compare it to two drunks, where you assume that if they hold on to each other, they will walk straight," says Adam Pilarski, senior vice-president of U.S. aviation consultancy Avitas. He points to the bungled 2005 merger of US Airways and America West, and adds, "That's usually not the case...
...will need to proceed with caution. Sure, rough economic head winds and the business of turning two firms into one can give cost cutting real momentum. The tough trading conditions following the Sept. 11 terrorist attacks were, after all, a "catalyst for the success of [the Air France-KLM merger] at the time," says Howard Wheeldon, an aviation expert at brokers BGC Partners in London. (Read "British Airways: High Costs Fuel Record Loss...