Post Merger and Acquisition Financial Performance Analysis : a Case Study of Select Indian Airline Companies

Mergers and Acquisitions are important corporate strategy actions that aid the firm in external growth and provide it competitive advantage. In today’s globalized economy, mergers and acquisitions (M&A) are being increasingly used the world over, for improving competitiveness of companies through gaining greater market share, broadening the portfolio to reduce business risk, for entering new markets and geographies, and capitalizing on economies of scale etc. This paper has focused on the performance of Indian Airline Companies after the consolidation of Airline sector in year 2007-08. The main objective of this paper is to analyze whether the Indian Airline Companies have achieved financial performance efficiency during the post merger & acquisition period specifically in the areas of profitability, leverage, liquidity, and capital market standards. Paired sample t-test has been performed to determine the significance differences in financial performance standards two year before and two year after the merger activity. In general, Airline Companies merger in India does not bring significance difference on the financial performance after the merger. The finding of this study shows that there is no improvement in surviving Company’s return on equity, net profit margin, interest coverage, earning per share and dividend per share post-merger & acquisition.