The Formation of the United Airlines Business Essay

Check out more papers on Aviation Economy

United Airlines was started in the early 1930s by Bill Boeing’s aeronautic conglomerate in for it to exploit demand for air transport and to dole out as an direct market for renowned Boeing aircraft. At first United served as a syndicate, involving the involvement of several autonomous airline companies. One of those companies was Varney Air Lines, recognized by way of being America’s first commercial air transport company. Boeing’s holdings grew to include airlines, airplane and parts manufacturing companies, and several airports.Later William Boeing’s company was broken down into three: a parts supplier, an aircraft manufacturer , and the United Air Lines airline group. The Board of Directors at Continental and United airlines agreed a stock-swap transaction that would unite them into the world’s principal airline on Sunday, May 2, 2010. On October 1, 2010, UAL Corporation (the parent company of United Airlines changed its name to United Continental Holdings, Inc. and completed its acquisition of Continental Airlines. United Continental Holdings, Inc. is the holding company for United Airlines and Continental Airlines. It has more than 80,000 employees all over the world.The company is committed to emerging the airline customers want to fly, and the airline employees want to work for. The company’s corporate and operational headquarters are sitiuated in Chicago. On October 1, 2010, United and Continental closed their previously announced all-stock merger of equals transaction to come up with the world’s leading airline. The new United will offer customers an enhanced travel best experience, combining the best products and services each carrier has to offer.

Don't use plagiarized sources. Get your custom essay on

“The Formation of the United Airlines Business Essay”

Get custom essay

The airline will be focused on being the airline that customers want to fly as well as the airline employees want to work for and the airline shareholders want to invest in.

United’s and Continental’s major operations consist basically of the transportation of persons, property and mail around the United States and abroad. United Airlines is an international carriers situated in the United States. Together with other regional flights operated on United’s behalf under capacity purchase agreements with several carriers, does approximately 3,400 flights a day to approximately 230 United States domestic and international destinations from its major hubs in L .A , Denver, San Francisco, Washington D.C. ,Chicago and Tokyo . Both airlines have suffered losses in the downturn and anticipate the merger to raise savings of more than $1 billion a year. The combined airline will serve up to 370 destinations, from the 10 hubs listed below .Their mission is to develop, implement and communicate United’s commitment to community service by sponsoring and supporting charitable organizations, as well as programs and activities that improve the communities where our customers and employees live and work as well as To be recognized as the best airline in the industry by our customers ,employees, and shareholders

Continental Airlines utilizes a divisional structure comparative to the management of its range of entities. This structural plan is owed to the intricate nature of the aviation industry as well as the independence necessary in operating a twenty-four hour a day, seven day per week worldwide business.

Their organizational structure is comprised of the president and the ceo,executive vice president human resource and labour relations,the executive vice president and chief revenue officer, executive vice president and president ,mileage plus holding, executive vice president communication and government affairs, executive vice president and chief information matters officer, executive vice president and operation officer, executive vice president and financial officer, executive vice president general counsel & secretary(interior).

Among its marketing strategy and product mix plans are the announcement that it had $9 billion of unconstrained cash at closing. Company executives said the merger will bring $1 billion to $1.2 billion of annual cost and revenue profit by 2013. The benefits will largely consist of $800 million to $900 million of incremental annual revenue, derived from the expanded network and service. In December 2009, the Company announced its intention to place an aircraft order for 25 Boeing 787A¢Ë†’8 Dreamliner aircraft and 25 Airbus.A350 XWB aircraft, with future purchase rights for an additional 50 planes of each aircraft type. The 25 Boeing aircraft and 25 Airbus aircraftare to replace the Company’s international Boeing 747s and 767s. The Company estimates that it will reduce its fuel costs and carbon emissions from the 25 Boeing aircraft and 25 Airbus aircraft combined by approximately 33% compared with the aircraft they will replace, lower average lifetime maintenance costs for the 25 Boeing aircraft and 25 Airbus aircraft combined by approximately 40% per available seat mile comparedwith the aircraft they will replace, and enable service to a broader range of international destinations while providing customers with state of the art cabin comfort. The Boeing aircraft order is pursuant to a purchase agreement entered into by the Company and The Boeing Company in February 2010 and the Airbus aircraft order is subject to the execution of a definitive written agreement that is expected to befinalized in the first quarter of 2010.

To ease good customer relations, Continental has built an remarkable customer data warehouse that the airline uses for marketing, customer service, and operational purposes. This is definitely an asset that the merged airline should capitalize on given its potential to help it improve traveler dependability,A increase the steadiness in which customers are served, boost marketing effectiveness through better targeting, and help the airline maintain good operational performance. Regardless of how you may feel about the airline industry’s shift to unbundle its product offering and charge to check baggage and for meals, ancillary revenues now generate a significant portion of airlines’ revenues. In its Q1 2010 earnings statement, United stated that its checked bag fees and ticketing and change fees contributed to a 0.8% increase in passenger revenue per existing seat mile , a key industry metric. United has developed a suite of optional travel products, branded ‘Travel Options By United'(TOBU),A which include the checked bag fees, day-passes to United’s Red Carpet Clubs, and access to priority security screening lines. United has integrated these into its digital channels, including its website, airport check-in kiosks, and mobile. While the execution is not always perfect, TOBU is clearly successful for United and is to be incorporated into the merged airline.

FinaGuarantees 125ncial performance and comparison

The Company participates in numerous fuel consortia with other carriers at major airports to reduce the costs of fuel distribution and storage. Interline agreements govern the rights and responsibilities of the consortia members and provide for the allocation of the overall costs to operate the consortia based on usage. The consortium (and in limited cases, the participating carriers) have entered into longA¢Ë†’term agreements to lease certain airport

fuel storage and distribution facilities that are typically financed through taxA¢Ë†’exempt bonds (either special facilities lease revenue bonds or general airport revenue bonds), issued by various local municipalities. Certain income statement and balance sheet amounts presented for the 2008, 2007 and 2006 Successor periods include the impact from the Company’s 2009 retrospective adoption of the new accounting principles related to accounting for convertible debt instruments that may be settled in cash upon conversion and determining whether instruments granted in shareA¢Ë†’based payment transactions are participating securities for purposes of calculating earnings per share.

Consolidated capacity was approximately 3% and 7% lower in the fourth quarter and the full year of 2009, respectively, as compared to the previous year. The Company permanently removed 100 aircraft from its fleet, including its entire fleet of 94 B737 aircraft and six B747 aircraft in order to do away with unprofitable capacity and divest the Company of assets that did not provide an acceptable return. The Company also streamlined its operations and corporate functions in order to match the size of its workforce to the size of its reduced capacity, resulting in a workforce reduction of approximately 9,000 positions during 2008 and 2009. The workforce reduction was completed through a combination of furloughs and furloughA¢Ë†’mitigation programs, such as voluntary earlyA¢Ë†’out options, to reduce the required involuntary furloughs. Of the total represented workforce reduction, approximately 45% was accomplished through voluntary furloughs. The Company reconfigured its entire Ted fleet of 56 allA¢Ë†’economy Airbus aircraft to include United First, Economy Plus and economy seating and continues to refit its widebody international aircraft with new first and business class premium seats, entertainment systems and other product enhancements. During 2009, the Company completed its upgrade of all of its B767 and B747 aircraft, which are used for international flights, and commenced the reconfiguration of its international B777 fleet in February 2010. The Company created new revenue streams through unbundling its flight services and various other new service offerings. The new revenue initiatives include fees for checked bags on domestic and international flights, express airport checkA¢Ë†’in and boarding through Premier Travel SM and Premier Travel PlusSM, and an annual subscription for two checked bags at no additional cost for United and Regional AffiliatesA¢Ë†’operated flights through Premier Baggage. In October 2009, Continental joined United and its 24 partners in the Star Alliance linking the airlines’ networks and services worldwide and creating new revenue opportunities, cost savings and other efficiencies; competeuiors.The domestic airline industry is highly competitive and dynamic. In domestic markets, new and existing U.S. carriers are generally free to initiate service between any two points within the United States. United’s competitors consist primarily of other airlines, and, to a lesser extent, other forms of transportation and emerging technological substitutes such as videoconferencing. Competition can be direct in the form of another carrier flying the exact nonA¢Ë†’stop route or indirect where a carrier serves the same two cities nonA¢Ë†’stop from an alternative airport in that city, or via an itinerary requiring a connection at another airport

Cargo revenues declined by $318 million, or 37%, in 2009 as compared to 2008, due to four key factors. First, United took significant steps to rationalize its capacity, with reduced international capacity affecting a number of key cargo markets. Second, as noted by industry statistical releases during 2009, virtually all carriers in the industry, including United, were sharply impacted by reduced air freight and mail volumes driven by lower recessionary demand, with the resulting oversupply of cargo capacity putting pressure on industry pricing in nearly all markets. Some of the largest industry demand reductions occurred in the Pacific cargo market, where United has a greater cargo capacity as compared to the Atlantic, Latin and Domestic air cargo markets. Third, lower fuel costs in 2009 also reduced cargo revenues through lower fuel surcharges on cargo shipments as compared to 2008 when historically high fuel prices occurred. Finally United, historically one of the largest carriers of U.S. international mail, was impacted by lower mail volumes and pricing beginning in third quarter of 2009 arising from U.S. international mail deregulation. The deregulation moved pricing from regulated rates set by the DOT to marketA¢Ë†’based pricing as a result of a competitive bidding process. Towards the end of 2009, the Company began to experience significant market stabilization and improvement in cargo industry demand and yields The Company’s business relies extensively on thirdA¢Ë†’party providers. Failure of these parties to perform as expected, or unexpected interruptions in the Company’s relationships with these providers or their provision of services to the Company, could have an adverse effect on the Company’s financial position and results of operations.

Did you like this example?

Cite this page

The Formation Of The United Airlines Business Essay. (2017, Jun 26). Retrieved February 2, 2023 , from

Save time with Studydriver!

Get in touch with our top writers for a non-plagiarized essays written to satisfy your needs

Get custom essay

Stuck on ideas? Struggling with a concept?

A professional writer will make a clear, mistake-free paper for you!

Get help with your assigment
Leave your email and we will send a sample to you.
Stop wasting your time searching for samples!
You can find a skilled professional who can write any paper for you.
Get unique paper

I'm Chatbot Amy :)

I can help you save hours on your homework. Let's start by finding a writer.

Find Writer