Examining value creation in airline mergers and acquisitions : shareholder reactions and financial performance outcomes

Mergers and acquisitions (M&As) in the airline industry are motivated by the pursuit of operational efficiencies, market power, and improved competitive positioning, but their impact on shareholder value and financial performance remains uncertain. This study investigates the effects of M&A announcements on shareholder returns for acquiring and target companies and evaluates the post-integration financial performance of acquirers. Using data from M&A transactions between 2003 and 2024, the findings revealed that target firms consistently experienced notable positive abnormal returns, while acquirers showed more modest or negative returns over mediumto long-term intervals. Additionally, the financial performance analysis of two selected transactions highlighted the challenges of achieving anticipated synergies, with outcomes varying significantly between the two. The findings highlight how deal-specific factors, post-merger execution, and broader market conditions collectively shape the success and outcomes of M&As in the airline industry.