Elizabeth Bailey - Faculty Research in Knowledge@Wharton

The Domino Effect: Will Airlines Follow One Another in the Consolidation Game?

Wed, 20 Feb 2008 15:18:03 EST

Delta Airlines is reportedly about to merge with Northwest Airlines in a deal that's likely to set off a major round of consolidation in the airline industry. Wharton experts say that other major airlines are likely to fall in line with their own consolidation plans. Or so the speculation goes. But this scenario has been talked about before. Is the latest consolidation dance for real? And what are the implications of such mergers for consumers, low-cost carriers and the economics of the airline industry overall?

CEO Succession: Has Grooming Talent on the Inside Gone by the Wayside?

Wed, 28 Nov 2007 15:54:07 EST

The recent departures of two chief executives -- Stanley O'Neal of Merrill Lynch and Charles Prince of Citigroup -- in the wake of major financial losses at their firms, have focused renewed attention on the issue of succession planning. Published reports speculated that both positions would be filled by outside candidates, and on November 14, Merrill Lynch announced that it had chosen John Thain, CEO of NYSE Euronext, to succeed O'Neal. While such a move is not surprising for a board wanting to signal a fresh start to investors, Wharton faculty say that, increasingly, companies are looking to fill top spots with external candidates, while spending less time on grooming future leaders and managing talent in general.

Around the World on $48 (or So): How High Can Discount Airlines Fly?

Wed, 05 Oct 2005 16:04:41 EST

As two more major U.S. airlines, Delta and Northwest, file for bankruptcy protection, it's the discount carriers that appear to be winning the battle for America's skies. But it's not only in the U.S. that discounters are giving the more established carriers a run for their money. Discounters are taking off in Mexico, India, China, Europe and points in between. What kind of competition do these discounters face, from the majors and from each other? And what obstacles, especially in countries like China, are governments and regulators putting in their way?

Few Survivors Predicted: Why Most Airlines Are Caught in a Tailspin

Wed, 09 Feb 2005 16:50:03 EST

Delta Airlines cuts fares in a price war that Merrill Lynch estimates will sap $2.5 billion in revenues from the six largest airlines. US Airways and United file for bankruptcy, and almost every other airline --Southwest is one of the exceptions -- reports significant losses. The cost of oil remains stubbornly high, adding significantly to cost pressures. The question is: How do you fix an industry littered with walking zombies? One answer, say Wharton faculty, is to let some of the sickest carriers die -- and stay dead.

When You Wish Upon a Star ... The Eisner Saga at Disney Continues

Wed, 06 Oct 2004 15:59:56 EST

Michael Eisner's decision to step down as CEO of The Walt Disney Company in two years hasn't made the succession issue there any easier. The company has been mired in controversy over board member conflicts-of-interest and various in-house maneuverings even as it struggles with disappointing performance by its movies and theme parks. Despite an announcement this week laying out more specific plans for Eisner's replacement and its board, questions about corporate governance, in this context and others, remain.

United Airlines' Pension Problem: Who, Ultimately, Is Going to Pay?

Wed, 08 Sep 2004 14:39:32 EST

United Airlines' proposal to halt payments to its pension funds suggests serious problems for the nation's pension-guarantee system, according to Wharton faculty and pension experts. The troubled airline, which declared bankruptcy in December 2002, said in July that it would stop funding its pension plans while it struggles to restructure under bankruptcy protection. The question is, how many other companies will renege on their pension obligations? And if the pension system collapses, will taxpayers foot the bill, just as they did for the S&L crisis in 1989?

Fare Wars: The 'Friendly Skies' Are More Cutthroat Than Ever

Wed, 16 Jun 2004 15:47:10 EST

The always-cyclical airline industry is passing through a particularly rocky time. Established carriers – hit hard by recession, terrorism, SARS, war and now skyrocketing fuel costs – face tough competition from a new generation of low-cost airlines whose business model doesn’t rely on the hub-and-spoke system and whose service has earned them accolades the big carriers can only dream about. But even the low-cost upstarts face an uncertain future as they expand into larger cities. Wharton faculty and other experts consider the airline industry’s future flight path.

A Sweet Song? Delta Aims at the Low-Fare Market

Wed, 12 Feb 2003 00:00:00 EST

On April 15, 2003, a lime-green plane will depart New York City for Florida. On it ride the hopes of America�s third-largest carrier, as Delta�s new subsidiary, Song, takes wing. With a new staff and new attitude, Delta is hoping to break into the burgeoning low-fare air travel market to an extent that United, American and Continental haven�t been able to achieve. So far, pre-flight reviews are mixed.

Corporate Boards Should Focus on Performance, Not Conformance

Wed, 27 Mar 2002 00:00:00 EST

The Enron debacle has brought new attention to the role of corporate boards and governance. Board members now increasingly realize the need to act vigorously to hold managements accountable and actively probe areas such as conflicts of interest and compensation of top executives. At the same time, however, would-be reformers of corporate governance practices must guard against going too far and imposing rules that tie managements� hands. Those were the recommendations of Wharton professors and a former CEO of Campbell Soup at a session on corporate governance in Philadelphia as part of the Wharton Fellows program.

Corporate Boards Should Focus on Performance, Not Conformance

Wed, 27 Mar 2002 00:00:00 EST

Are Government Bailouts Bad Business?

Wed, 10 Oct 2001 00:00:00 EST

Even the most cold-hearted free-marketer would concede the airlines got a tough break in the two-day grounding after the terrorist attacks. No manager could have been expected to anticipate events on the scale of Sept. 11, or to set aside enough money to cover the revenue shortfalls that followed. So a government bailout is a reasonable response, right? Not necessarily, say those who have studied past examples of government bailouts.

Fear of Flying: Passengers and Airlines Can Expect Turbulent Times

Wed, 26 Sep 2001 00:00:00 EST

Government aid to beleaguered U.S. airlines will help stem the industry�s tide of red ink, already in evidence even before the Sept. 11 disaster. But airlines also must work harder than ever to stimulate demand and emphasize airline security, say Wharton faculty and aviation experts. An economic rebound would help.

United Airlines-U.S. Airways Merger: Turbulence Ahead?

Wed, 05 Jul 2000 14:32:15 EST

The proposed merger of United Airlines, the nation�s biggest carrier, with U.S. Airways, the sixth largest, would create a jumbo-jet of a company. It would handle 27% of U.S. airline passengers with a fleet of some 1,000 planes, serve 170 cities worldwide and fly in and out of eight major U.S. hubs. What are the chances that the government will approve such a deal? How about the pilots? And what can consumers expect with regard to cost, convenience and comfort? Knowledge@Wharton analyzes the flight path of this proposed merger.

The Euro Revolution

Sat, 27 Mar 1999 05:02:49 EST

The launch of the Euro will change not only the way that European countries trade among themselves, but also the manner in which the world does business with Europe. Karel Van Miert, Europe�s commissioner for competition, explains how competition is transforming a continent.