M&A activity is in full swing in many industries. The airlines are at the forefront as new challenges appear on the horizon. Airlines must have the liquidity, capital, and lines of credits to acquire new fleets, equipment, maintain aging aircraft and facilities, pay large overhead costs and stay competitive. That's a tall order that requires excellent management skills and the scale to command concessions from suppliers. Japan Airlines could not turn the corner financially and became the most prominent bankrupt carrier in 2010. United is seeking a merger with Continental, TAM and LAN have announced their plans to merge in Latin America. The battle lines are being drawn with three major world alliances.
In the U.S., American Airlines (AMR) and USAirways have been left out of the big dance, but rumors are now swirling that the two carriers may be flirting with a merger of their own. The two carriers are not compatible and such a potential outcome will not be in the best interest of the traveling public. American is the only carrier that has not filed for bankruptcy protection and is now paying the price since it still retains the expensive leases and legacy costs that other carriers were able to reduce or erase.
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