Strategic reorientation and business turnaround : the case of global legacy airlines

This paper aims to illustrate how legacy airlines can reorientate to achieve sharp recoveries in performance following prolonged periods of stagnation, decline and eroding competitiveness. The authors use a qualitative analysis of five longitudinal case studies of legacy airlines that embarked on strategic change between 1997 and 2006. Data collection spanned ten years and included archival data, public documents, news clippings, accounts in specialist books and internal company documentation. The paper identifies two distinct approaches for reorientation in the legacy airline industry. Companies that have fallen behind and are in risk of failure focus on regaining customer trust and loyalty, and restructuring route networks, business processes and costs in an "improvement and innovation" reorienting approach. Underperforming airlines, for whom growth has declined in traditional markets and who note that opportunities exist elsewhere, focus on product and service development and geographical growth in an "extension and expansion" reorienting approach. The paper develops a framework for successful reorientation in the legacy airline industry. This framework encourages executives to focus on and leverage profit maximization, quality, leadership, alliance networks, regional consolidation and staff development during periods of strategy formulation and reorientation. This research addresses the dearth of understanding and attention afforded to the concept of reorientation in the literature on strategic turnaround. The research also serves to emphasize the presence and importance of reorientation as a strategy of change within the legacy airline industry. Furthermore, in demonstrating how this strategy can be implemented in a sharp-bending or performance improvement context, this study illustrates how reorientation is intertwined with the broader turnaround process.