Aviation Week Names Top-Performing Airlines

By Adrian Schofield
Source: Aviation Week & Space Technology

One of the main features of the global airline industry in recent years has been the number of mergers and acquisitions among leading carriers. However, the TPA results show that the jury is still very much out on how successful the wave of consolidation has been.

On one hand, there are carriers like Delta Air Lines and Lufthansa that appear to have digested their mergers/acquisitions, and their performances went up this year. Delta has logged an increased score in four of the past six years.

But others are not yet enjoying the same lift. In the large category, three of the most dramatic score declines were Latam, International Airlines Group, and United Airlines—all of which have recently completed mergers.

The more recent mergers are obviously at a disadvantage when compared to linkups that are more mature. “It takes a minimum of two years for a successful merger, and in some cases longer,” Neidl says.

However, execution is still a variable factor. The relative TPA ranks show that “mergers can be done right, but if they are not executed to perfection, they can be problematic,” says Hamlin.

Jenks notes that macroeconomic issues also come into play. For example, British Airways “saw a pot of gold at the end of the rainbow” with its merger with Iberia, but “at the other end of the rainbow was Spain” and its struggling economy.

Likewise, the LAN-TAM merger has coincided with an economic slump in Brazil, TAM's home market. Lowry points out that while “the economics [of the deal] were spot on, the timing was lousy.”

The advisers stress that some of the link-ups are not yet true mergers. Air France-KLM and IAG, for example, have not integrated some crucial parts of their operations, meaning that they miss some of the advantages of mergers.

As with previous TPA studies, airline fortunes vary widely by region. When the carriers are grouped geographically, most regions saw a decline in median scores—although the drop was shallower. North America was an exception, with the previous decline leveling off in 2012.

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