The Alliance Between Us Airways and British Airlines

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Industry Analysis Two large airlines take the initiative to expand their horizons and decide to affiliate and join together. The alliance between US airways and British Airlines was widely publicized and criticized because it was the largest such venture ever attempted in an industry. British Airways, in 1939, British Overseas Airways Corporation was formed. The company became heavily loaded with debt through the 1950s and 1960s as it acquired new aircraft, experienced severe swings in capacity as passenger traffic ebbed and flowed, and began to compete internationally with the large U.S. airliners. For many years the British government continually subsidized the losses. It was not until the early 90’s when British Airways had its eye toward the heavily traveled transatlantic market. US Airways, In 1953, all American Airways, which had been a regional carrier serving remote communities of Pennsylvania and West Virgina, changed its name to Allegheny Airlines. The firm grew rapidly under government regulation during the 1950s, and 1960s, based on a network of routes assigned to it by the Civil Aeronautics Board. Allegheny subcontracted its less profitable routes to smaller, more efficient carriers, each of those, in turn, fed into Allegheny’s route system that was expanding rapidly through a series of acquisitions. By mid 1970s, the company had become a major regional airline based out of Pittsburgh, Pennsylvania. Allegheny suffered, however, from a serious perception problem from its passengers. Because it faced no competition, it had little incentive to improve. This all changed with the US Airline Deregulation in late 70’s. In July 1992, the two companies announced their alliance. Both companies had worked with strategic alliances before for many economical and non-economical reasons that brought failures in the past. This alliance involved

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