Review of Recent Legacy Airline Mergers in the U.S.: An Empirical Study from Investors’ Perspectives

Abstract

Since the 2008 financial crisis, three legacy airline mergers have dramatically reshaped the landscape of the U.S. airline industry. Due to the lengthy process involved in an airline merger, it is important to understand whether the investors view the merger favorably. This study examined how investors reacted to the three recent legacy airline mergers in the U.S. by adopting a GARCH-EVT-Copula approach. Our empirical results revealed that positive dependencies between returns and trading volume changes were observed for each merger during various periods, indicating that investors were optimistic about the mergers. Accordingly, implications for future mergers are discussed.