Why Southwest Should Acquire Alaska Air Group

By Alex Ha (Ivey), Aidan Berry (UCLA), Mark Blekherman (Wharton),

Nicolas Bozenko (Sussex), Sid Sharma (UCL)


Summary


In our brand new report format, we explore the potential acquisition of Alaska Air Group by Southwest Airlines. The companies seek to position themselves for a resurgence of demand for low-cost leisure and domestic travel.


The acquisition would give Southwest new geographical exposure to the U.S. West Coast, and would align values of the two brands to provide “affordable air travel” for everyday Americans.


Further, Southwest could benefit directly from Alaska’s historically strong capital allocation; they have consistently outperformed industry peers with high returns on invested capital.


However, the deal presents risks to existing partnerships that Alaska Air Group has with larger airlines like American Airlines, and there are challenges associated with the fleet integration of both Airbus and Boeing operators.


This acquisition would serve as a benchmark for the changing industry. Read the full report below to learn why and how this monumental acquisition could take place.


Read our full report below. You can download the PDF here.