IAG and bmi (Section A)

The motives for takeovers and mergers and how these link with corporate strategy

IAG, in particular British Airways, were looking to increase their presence at Heathrow (UK's largest and busiest airport) 

It also allows IAG to accelerate their growth into emerging markets which are not yet served by other airlines which will also give them a competitive advantage 

The problems of takeovers and mergers including difficulties integrating businesses successfully

The ECC (European Competition Commission) said that the takeover would only be allowed if British Airways give up 14 slots out of the 56 that were available so that they didn't create a monopoly 

The factors influencing the success of takeovers and mergers

Whether the increase in slots would have any affect on performance - reduce capacity on other slots so less chance of delays 

Whether the 1,100 saved jobs can be integrated into the business effectively 

The impact of takeovers and mergers on the performance of the business

Although to early to make final decisions ...

The takeover has allowed IAG to increase the number of daily slots at Heathrow by 42 which gives them 53% of total slots whereas the nearest rivals Virgin, only have 3%

In the long term, IAG will be able to offer new destinations and routes which will help to attract new customers and therefore increase sales 

1,100 cabin crew, engineers and pilots will be transferred to IAG saving high quality jobs

IAG also acquired another 27 bmi planes which are being repainted as British Airways planes, taking their total to 266 planes

The impact on, and reaction of, stakeholders to takeovers and mergers 

Willie Walsh (CEO) has said that the takeover is beneficial for both Heathrow and London's economy 

Richard Branson, Virgin, is strongly against the takeover as it will mean that IAG will have 53% of Heathrow's daily slots whereas Virgin only have 3%

Branson also believes that it gives IAG an unfair advantage over other airlines including Virgin and also believes that the remaining 14 slots should not be sold separately to individuals, but to a single airline otherwise it still benefits IAG

The reasons why governments might support or intervene in takeovers and mergers

The government may support the takeover as it will save 1,500 jobs (56%) of the jobs which would have been lost otherwise

Also IAG are looking to create jobs at it's engineering factory in Glasgow from 2014 while working with Rolls Royce which is also creating potential job opportunities