What's In A Name? The Ability To Make Or Break A Merger

To prevent a merger from descending into emergency, a clear name change and strategy can work miracles. A look at airline names that have soared, and those that have sputtered.

We’ve always known that the golden age of air travel is long gone. The fabled United tagline "Fly the Friendly Skies" seems quaint, a by-product of a time when food was actually available and perhaps even tasty on flights. Now, it’s the most tortured, dreaded way to get from Point A to Point B.

And these days, bigger is better if you’re a domestic airline, as evidenced by the melee of megamergers. Aggregation is in the air these days—with the recent announcement of American Airlines and US Airways, creating the world’s largest airline with an expected market value of around $11 billion. But engineering a peaceful union is tricky business, as seen by predecessors: the glacial pace of the Delta/Northwest merger and the smoother but still shaky United/Continental combo.

A megamerger is a chance to re-evaluate and redefine two brands that may be on their way down. Everyone loves a comeback, and it’s an opportunity to either build a new brand or build upon existing, if slightly tarnished, brand equity. Think of it as repurposing and upcycling for capitalism, taking old brands and making them brand new again. But this whole process of evaluation is often delicate, because it means dealing with the very marrow of what makes a brand: its culture and people—and ultimately making a value judgment on what to retain and what to reject.

Often the most contentious bone is the name. To prevent a merger from descending into emergency, a clear name change and strategy can work miracles. Of course each situation is different, but in general, on the way to the aisle, merging parties will consider one of the following possibilities:

Take one name, toss the other
This usually happens where one brand has much stronger equity than the other. Quite naturally, companies want to keep the name of the mightier brand. If something isn’t broke, then don’t try to fix it with an unfamiliar name. Sometimes, it’s the acquisition that has better brand recognition. For example, AOL News folded to become the Huffington Post, and when NationsBank acquired BankAmerica, the entire entity became Bank of America. SBC Communications bought AT&T and assumed its name. More often, it’s the acquirer who bestows their name, perhaps to signify that they’re the victor. Maybe they want to present a unified face and identity or perhaps it’s to shine up a sullied reputation. ING Direct becomes Capital One 360, and Pfizer is plastering its name all over Wyeth. In the United/Continental combo, Continental has faded into the background, leaving only its globe logo behind.

Save both names, squish them together
In this case, both companies compromise and combine their names, especially if they’re perceived as equals in terms of brand equity. Notable examples include the synergistic bonding of AOL/Time Warner, DaimlerChrysler, PriceWaterhouseCooper (now simply "PwC," thankfully), and GlaxoSmithKline.

Scrap both names, select a new one
In this last scenario, an entirely new name clearly signals radical change. It’s a blank slate, on which a truly fresh name and identity can be scrawled. Keep in mind it does require considerable effort and expense to envisage and execute, not for the faint of heart or those with shallow pockets. Classic example: Verizon (from Bell Atlantic and GTE).

Countering this trend of crazy consolidation, a few airlines have strategically fragmented, begetting stripped-down, lower-fare "airlines within an airline" or divisional brands. One recent example is Hawaiian Airlines’ launch of its inter-island airline ‘Ohana, serving the islands of Molokai’ and Lana’i with two turboprop planes. This stands in stark contrast to the fate of other island-owned airlines (Aloha Airlines was bought out by Alaskan Airlines, and Island Air, supposedly by Oracle owner Larry Ellison).

The word ‘Ohana is Hawaiian for "family," and "conveys the mission of the new operation: bringing people together from near and far." It’s short, easy-to-remember, easy-to-pronounce, and sounds welcoming. It gives you a warm fuzzy feeling, something not commonly caused by airlines these days. But as cute and friendly as the upstart seems, the track record for start-up airlines isn’t stellar.

A few of these pint-sized airlines adopted short and engaging names to complement their folksy, approachable personalities. Remember Ted Air, the scrappy grandkid of venerable United, or Song, the spirited spawn of Delta? Other nested airlines took the more descriptive approach to more directly connect themselves to their parent brand (see Delta Express; MetroJet, part of US Airways; Shuttle by United; and Continental Lite/CALite. Alas, despite their naming strategy, all of these endeavors failed. Of course it’s worth remembering that the failures weren’t due to the names; a great name isn’t going to save a bad business model (or even a good business model in a bad economy).

So what was the verdicts on AA and US Airways? At a press conference on January 17, American Airlines CEO Thomas Horton debuted the airline's new livery in a recorded video . The American Airlines name is emblazoned on the sides of the white planes, with a bold, stylized American flag on the tail (subtly recalling the US Airways flag). And there’s a newly designed eagle on there too, just in case you forgot that this is an American company. It’s a nice blend of the old and the new, and shows the commitment to reviving AA as a company and a brand. As the newly-crowned world’s largest airline, they’ve got a lot to live up to.

[Image: Flickr user Shandi-lee Cox]

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