Airline Acquisition Market Analysis

This assignment analyzes the feasibility of a hypothetical airline acquiring another bankrupt airline. It examines the acquiring company's market research, financial stability (evidenced by positive EBIT for five consecutive years), and the impact of Italy's political and trade environment. The analysis concludes on the potential success of the acquisition based on these factors.

INTERNATIONAL
LEADERSHIP
AND
ENTREPRENEURSHIP

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
TASK: Director OF HUMAN RESOURCES ................................................................................1
Overviews of the issues faced in Alitalia....................................................................................1
Agenda of Wizz Air....................................................................................................................1
CONCLUSION................................................................................................................................2
TASK: BOARD MEETING SIMULATION..................................................................................3
Summary of Principal Areas of Business....................................................................................3
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
International leadership refers to a social relationship that constitutes leads and followed
with respect to common goals. It is very important in the organisation to have effective
leadership so that employees morals are not affected. This present report is context to current
situation at Alitalia and its impact to employee moral and culture.
MAIN BODY
TASK: PRINCIPLE AREAS
Market Sector Research and Industry Research : It is the assessment of the business
environment of a particular sector or industry in a country. It consists of reviewing the political,
market and economic factors that impact the way any sector or industry develops. In Italy, the
performance of Aviation industry is incredible as they are developing and growing with a very
high speed. Wizz Air company is developing rapidly in Italy by providing services at lower
prices.
Competitive Analysis : It is the assessment of position of competitive companies in the
market. It helps Wizz Air in analysing the competitiveness of the industry and also helps in
formulating corporate strategies for remaining competitive in market.
Macro Environment analysis : It is the analysis of macro environment of aviation
industry that shows how macro factors affects this industry. For example, Wizz Air business
would be favourably be affected by political stability in the country.
Corporate Research : The corporate powers and capabilities is incredible. For example,
company has leading share in the market, offers services at the cheapest rates, Company has
balances geographical revenue mix etc.
Economic and Financials: This shows the liquidity and soundness of company in terms
of its profitability. The financial position of the Wizz Air is sound in the last few years due to its
consistency in providing cheap flights to its customers over the years.
Director OF HUMAN RESOURCES
Overviews of the issues faced in Alitalia.
The issues faced by Alitalia becomes a hot topic in the country. It is because the
employees moral and entire culture of organisation is affected. On 10th April 2018, Alitalia
entered into offical bankruptcy which makes the organisation struggling heavy loss. There are
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many companies who came to acquire Alitalia just because of bankrupt like Jet, Air France-
KLM, Wizz Air etc. But, Alitlia has appealed for government grant. Italian government has
awarded $742 million interest bearing bridge loan after the firm filed for extraordinary
bankruptcy proceeding in April as well as employees rejected a deal on benefits and salary cuts
proposed by the company (Reilly and Williams, 2017). This is the issue has affected the moral of
employee in great manner.
Agenda of Wizz Air
Wizz Air company is going for the acquisition of Alitalia company as it is one of the best
and well-known company in Rome, Italy. But, Wizz Air is very much concern about the current
position of the company just because of current position of Alitali which is directly influencing
the moral and culture of employees. They are also highly concern that, the culture of both the
organisation are different which can also leads to conflicts in management or employees. Thus,
the strategy and policies of human resources at Wizz Air company could positively improve the
employee motivation as well as engagement.
Here are the strategies of Wizz Air company that would raise the employee moral as well
as improve the culture are as follows-
They used to listen employees- This is one of the best human resource strategy at Wizz
Air as they always used to listen their employees as what they expect from their company. HR
managers used to pay attention on the ideas of workers and act on the feedbacks. Thus, this
strategy will boost the employee's moral and employees engagement within Wizz Air firm.
Rewards and Recognition- The departments of Human resource required top put the
awards and acknowledgement programmes at workplace. It is very important that employee need
to feel apprehended and valued. The employees of Alitali has rejected the proposal of benefits
and salary cuts. Thus, with this policy of Wizz Air's HR department, boost the moral and make
optimum engagement of employees at workplace.
Supportive of Career advancement- It is fact that employees do not stay within
company for life as they want to escape new opportunities for career advancement. HR managers
of Wizz Air are very conscious about the career advancement of employees. This strategy could
boost the moral of employees of Alitali company and make them engage with the Wizz Air firm.
Proper Training- Training play a vital role in encouraging employees moral and them
feel valued for the organisation. HR managers at Wizz Air used to organize training to
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employees to raise their skills and knowledge. By organising training on regular basis at
workplace boost the employee's engagement and culture at workplace (Principi, Fabbietti and
Lamura, 2015).
Be Clear about the goals of company- This is also one of the HR strategy of Wizz Air
company as they engage their employees in decision making activity of organisation. When it
comes to rolling out yearly goals, workers need to b open as for employee and employer, t is
win-win situation. Thus, this HR strategy boost employee engagement.
Thus, with these HR policies and strategies of Wizz Ait company, it is cleared that,
managers can boost the employees moral of Alitali firm positively when they acquire the
organisation (Reilly and Williams, 2016). These policies are strategies has capabilities which
can help company in taking decision for acquisition.
CONCLUSION
The above report comes to the conclusion that Wizz Air company could acquire Alitalia
company as the human resource policies and strategies are very sound and effective. It is also
concluded that it is very important to have the great level of employee engagement and culture
within organisation.
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TASK: BOARD MEETING SIMULATION
Summary of Principal Areas of Business
Market Sector Research and Industry Research
It is the sector analysis is the economic and financial conditions of given sector economy.
Sector analysis serves to render an capitalist with a judgement about how well organisation in the
sector are expected to perform. Companies operating in the aviation industry is thriving despite
the prices of oil is high. Wizz Air company is developing rapidly in Italy by providing services at
lower prices (Rauch, Unterhofer and Dallasega, 2018). Last year, the number of passengers reach
to 29.6 millions and it is expected that it will reach to 36 millions in this present year. Thus, it
shows that, Wizz Air company could acquire Alitalia company.
Competitive Analysis
Basis Wizz Air Alitali Easyjet
Services Top class services is
provided by Wizz Air.
The services Alitali
provides is Medium.
The service quality is
average.
Number of Employees 11,455 12,013 12,280
Marketing Strategies The company very
efficiently uses the
online marketing
channels for making
its products and
services reach to
masses. A large
portion of its business
is conducted through
its official website and
other collaborative
partners. It focusses on
expanding its business
by venturing into new
The company focuses
on advertising its
services aggressively
trough promotional
campaigns, events,
shows etc. It did not
however, recognized
the power of digital
marketing and did not
use it efficiently which
led to its failure.
It markets its products
through promoting
aggressively on social
media and television.
It also employs the
strategy of remaining
competitive in the
market by offering the
cheapest flights across
1000 routes in the
world.
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emerging markets of
the world (Eikeland,
and Skjærseth, 2016).
Macro Environment analysis
The macro environment analysis involves macro factors such as political, technological,
economical, social and legal.
The political environment of Italy is stable which positively impacts the business of
company. Government of the country have formulated favourable trade policies that helps in
operating airline business conveniently. Likewise, the technological advancement in the country
is another factor that favours the airline company because of the fact of that Italy is a developed
country where public infrastructure related to communication and transportation is developed.
Such advancement in the country affects the business of company in a positive way.
Legislation related aviation industry are very strict which is a matter for concern for the
organisation and for avoiding any penalties, it has to properly adhere to such laws. Also, mergers
and acquisitions laws in the country involves various aspects that have to be fulfilled for
acquiring an airline organisation.
Corporate Research
As per the corporate research, the potential earning of the company is analysis and its
assessment of competitive environment of the company. The strength and abilities of company
shows that Wizz Air can acquire Alitalia company (Borokhovich, Lee, and Simkins, 2016). Here
are the capabilities of Wizz Air Company which are as follows-
 Company has vert low unit cost.
 Wizz Air offer low fares which attract many customers.
 Company has leading share in the market.
 Ancillary revenue is very high in Europe.
 Company has balances geographical revenue mix.
 The financial performance is very strong.
These strength shows Wizz Air company can acquire Alitalia company.
Economic and Financials
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The economic and financial position of the Wizz Air is sound in the last few years due to
its consistency in providing cheap flights to its customers over the years. The company made (€)
246 million in the year 2017. In the year 2018, it made (€) 275 million that shows that company
is continuously growing year to year in its profitability and its operations by making its presence
felt more at the global level.
As per the reports by CAPA, the aircraft organisation is growing at 15% annually and has
counted the company in the list of Europe's most profitable airlines which is not desperate for
IPO to raise funds from public platform (Wizz Air: growing at 15% annually, one of Europe's
most profitable airlines "not desperate" for IPO, 2014). The company is still very new and
young and has been estimated that it would grow enormously, giving stiff competition to other
established airlines in the Europe. The annual reports of the company has showed positive EBIT
for the five consecutive years from 2010 to 2015.
The current year's financials of the airline are also showing positive net income as stated
above which is a favourable condition for the company to successfully expand its operations by
acquiring the bankrupt airline Alitalia (Pepi, 2016).
CONCLUSION
The above report comes to the conclusion that the market research of the company is very
strong which allows company to acquire company. Further, the political environment of Italy is
stable which positively impacts the business of company. Government of the country have
formulated favourable trade policies that helps in operating airline business conveniently.
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REFERENCES
Books and Journals:
Albrecht, S. L and et.al., 2015. Employee engagement, human resource management practices
and competitive advantage: An integrated approach. Journal of Organizational
Effectiveness: People and Performance. 2(1). pp.7-35.
Borokhovich, K., Lee, A. and Simkins, B., 2016. Journal influence in corporate
research. Managerial Finance. 42(4). pp.376-389.
Eikeland, P. O. and Skjærseth, J. B., 2016. Comparative Analysis. In Corporate Responses to EU
Emissions Trading(pp. 271-300). Routledge.
Noe, R. A., Hollenbeck, J. R., Gerhart, B. and Wright, P.M., 2017. Human resource
management: Gaining a competitive advantage. New York, NY: McGraw-Hill Education.
Pepi, M., 2016. The Usefulness of Financial Statements in Making Financial Diagnosis. Ovidius
University Annals, Economic Sciences Series.16(2). pp.583-588.
Principi, A., Fabbietti, P. and Lamura, G., 2015. Perceived qualities of older workers and age
management in companies: does the age of HR managers matter?. Personnel
Review. 44(5). pp.801-820.
Rauch, E., Unterhofer, M. and Dallasega, P., 2018. Industry sector analysis for the application of
additive manufacturing in smart and distributed manufacturing systems. Manufacturing
Letters. 15. pp.126-131.
Reilly, P. and Williams, T., 2016. Global HR: Challenges facing the function. Routledge.
Reilly, P. and Williams, T., 2017. How to get best value from HR: The shared services option.
Routledge.
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