American Airlines entered bankruptcy protection in September 2004, which is the second major airline to receive bankruptcy protection in two years. For American airlines, the merger with western airlines will bring benefits in at least two ways. First, the merged new company will become a national low-cost airline, even larger than the current "discount king" Southwest Airlines. At present, the proportion of low-cost flights in the whole market share is increasing. Second, the merger will complement the regional market. The market situation of American airlines is obviously "strong in the east and weak in the west", so it is urgent to find an effective way to expand the market network, and Western Airlines, which mainly operates in the western region of the United States, is an ideal partner.
High oil prices and low fares are two "obstacles" that currently plague the bankruptcy and reorganization of American airlines. Therefore, American airlines urgently need the help of capital to enhance their competitiveness after the bankruptcy protection expires.