Mergers & Acquisitions: Success & Failure

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In May of 2011, Southwest Airlines Company completed its purchase of competitor, AirTran. By acquiring a competitor that also provides low-cost airline service, Southwest has become a much stronger force in the industry, able to offer more routes. The combination of the two companies however has been problematic for stakeholders. Customers have had trouble booking tickets, because the company chose to continue to operate AirTran as a separate business. The two computer systems were not linked so "different prices and seat availability sometimes show up for the same flight on Southwest's and AirTran's online sites" (McCartney, 2013). Also, Southwest is not allowing frequent fliers to share benefits between the two companies (transfer passes). As a result, the much heralded merger has resulted in "delay, disruption and disappointment for travelers" (McCartney, 2013). Southwest purposely went slow in incorporating AirTran into its' business but this has frustrated travellers, who expected improved efficiently, better pricing, and increased routes. Instead, the companies continue to operate separately, thus failing to take advantages of potential economies in scale. This is in part because Southwest's reservation center cannot handle many aspects of AirTran's business, like international flights. Out of 50 AirTran destinations, only 14 have been moved to be under Southwest's control two years after the acquisition. Southwest plans to continue operating AirTran separately through the end of 2014. As a result, the company has a duplication of efforts in many cases, has a more complicated operation, and has frustrated travellers. So far, this acquisition has not fulfilled the promise of offering greater low cost routes to consumers due to the myriad of issues and failure to integrate.
The toll on human capital has been large. Southwest and AirTran ticket agents must search route by route to find flights for stranded passengers, when ...