United Airlines Case Analysis Sample

Table of Content

United Airlines is owned by the UAL Corporation and was incorporated on December 30. 1968. The existent company was formed may old ages before this really in 1925 and was a private mail transporting service between Pasco. Washington. and Elko. Nevada. and from these low beginnings they formed a were able to get down a company that would come to be a planetary leader in the air hose service.

From the 1960’s to the 1980’s the company had 6 different presidents and started to spread out and venture into different facets of concern other so air hoses and were unable to hold any success. These companies that they purchased were non a success and were subsequently resold. During the late 1980’s United purchased the Pan American Airways pacific Division and by October of 1990 they announced that they were traveling to buy the Pan American Routes between London and the United States. With the overspending for the Pan American routes the company suffered record losingss and had to work for many old ages to reimburse the cost.

This essay could be plagiarized. Get your custom essay
“Dirty Pretty Things” Acts of Desperation: The State of Being Desperate
128 writers

ready to help you now

Get original paper

Without paying upfront

They sold the flight kitchens and initiated a hiring freezing and although they were able to salvage the company $ 400 million this was still non plenty to reimburse the losingss they had been enduring. At this point is when the company’s president. CEO. and other individuals from the upper direction stepped down from their places and created an Employee Stock Option Plan and the employees gave up dividers of their benefits and wages for stock in the company.

By 1994 it was now the largest employee-owned concern in the universe and the employees all over the universe had a place at the board and we able to be influential in the determinations that the company was doing. In 1995 the company partnered up with other taking air hose companies to organize the Star confederation. This put United Airlines in the place to be able to vie in the planetary market and had reported net incomes in the following 3 old ages higher so the company has of all time had. But with the worsening economic system and a worker work stoppage that resulted in the cancelation of flights and a $ 700 million net income loss the company would non be able to prolong these net incomes and by the twelvemonth 2000 the company recorded its largest net income losingss.

United Airlines likes to utilize strategic planning to seek and remain in front of the competition but in its history it has non ever worked. United Airlines has tried to do amalgamations without the blessing of the brotherhood and were non able to finish it when the section of justness said that the amalgamation would non go on because it would convey a loss in competition.

One of the things that has helped the concern. is that they use a hub and spoke method for their riders. This allows the company to supply many different air ports and terminuss that its clients can utilize and besides helps to stream line flight agendas and saves the company 1000000s of dollars every twelvemonth. Partnering with these major companies to organize a planetary confederation helps to besiege national Torahs. portion resources to develop extra paths and planetary selling schemes.

The major confederations were Star. Oneworld. SkyTeam. and Wings. The agreememnt that these companies made to work together saved all of the 1000000s of dollars and was able to assist all of the companies to vie globally.

Obviously one of the biggest fiscal impacts that the company has faced was the terrorist onslaughts on September 11th and the fiscal and economic impact that this event caused on its ain. United air hoses responded to the onslaughts by put ining slug cogent evidence doors on all the cockpits and learning the pilots how to utilize tazer guns.

The authorities placed a $ 5 billion hard currency payment to the industry to assist with costs and besides guaranteed a $ 10 billion loan to the industry and its bearers. United air hoses responded by seeking to cut costs which included cut downing the figure of flights. they eliminated all free services such as supplying nutrient and drinks. tightened refund demands. and eliminated corporate price reductions on inexpensive menus.

The company besides had to take a expression at their high laobor costs. United’s pilots are the highest paid in the industry. and in the 2nd one-fourth of 2002 labour costs were about 47 % of the entire gross of the company. Even though the company was able to cut costs at that place was ever the lifting cost of fuel that was aching the company and there was nil that they could make to reimburse any of the cost.

In 2000 the United Airlines spent over their fuel budget by over 40 % and has non been able to budget adequate money each twelvemonth because of the inflow in the monetary value of oil. With the company go oning to describe a loss they have lost their recognition evaluation which takes away one million millions of dollars in loan money and besides makes 1000000s of dollars in involvement due. This is something that has affected all of the major air hoses doing a continued loss and diminution in the air hose industry wholly.

United Airlines in 1994 became the largest employee owned company in the universe. I feel that this is one of their greatest strengths because the endurance of the concern is put into the custodies of the employees. One of the greatest incentives for this company is the fact that the employees are able to act upon the operations of the concern. Another strength is the manner that United Airlines and UAL work with other big companies to maximise net incomes and cut cost across the industry.

When organisations like Star and Wings were formed they truly helped to unify the full air hose industry. This confederation was important for the hub and spoke method of travel that was salvaging the company 1000000s of dollars a twelvemonth. Weakness- The lifting fuel costs will ever be a failing of the air hose industry. At one clip United had the highest paid employees. even over their more successful rivals. Opportunities- I would state that the biggest chance that United Airlines has is to go on to spouse with companies that have a personal intrest in the company itself like GE. GE has loaned United Airlines over 7 billion dollars since the 2001 terrorist onslaughts. They are United’s largest investor having $ 1. 6 billion worth of stock in the company. Besides as advancments in astronauticss lessen the sum of fuel that it takes to fuel the turbine jet motors on the aircraft it may some twenty-four hours make air travel more profitable.

Threats- There are so many menaces to the air hose industry that it is a miracle that any of them have survived. This is a concern that has to run every twenty-four hours with high over caput costs and one error can be the company 1000000s. There are besides menaces from other concern inside the air hose industry seeking to under monetary value their rivals and do certain that their rates are the cheapest. Besides menaces can come from terrorist onslaughts. When the terrorists attacked the universe trade center the air hoses had to anchor all flights and lost one million millions of dollars. Although united air hoses were already in fiscal problem the onslaughts merely made certain that the company was traveling to hold to register bankruptcy.

As of December of 2012 United Airlines pilots have agreed to a new articulation brotherhood contract. by holding to this contract it will assist to rush up the amalgamation with Continental. They are traveling to subscribe a new four-year contract. which includes rises averaging 43 per centum and bigger retirement parts. The amalgamation will besides cover those who came from United every bit good as pilots who flew for Continental before the bearers merged in 2010 into United Continental Holdings. Pilots will now wing under the United’s name merely but at that place amalgamation protects the pilots and the brotherhoods involved in the amalgamation.

The air hoses about 10. 000 pilots will split a $ 400 million ball amount as portion of the amalgamation. The contract gives United Continental the ability to get down a major enlargement of the usage of larger regional jets with 70 or more seats. Most of the jets have 50 to 76 seats. are operated by regional air hoses and are non able to do a net income. If they are able to run at 76 seats so these jets can run and do the company a net income even with the high costs of fuel.

I truly feel that there isn’t any speedy hole that is traveling to assist the air line industry. There are so many lending factors to this type of concern that it is impossible to estimate whether an air hose will be successful or non. The fact that at that place seems to be no terminal to the rise of the monetary value of oil is the worst state of affairs for the air hose industry. When the monetary value per barrel of oil additions it translates into 1000000s and 1000000s of dollars to the air hoses. United Airlines as a concern has gone thru many presidents and CEO’s that have tried to do the company successful but the air hose still seems to fight.

All of the air hoses have been affected in the alteration in the economic system and the lone manner that they are traveling to be successful is if the economic system as a whole recovers. There are so many people that are non taking holidaies and going because of the economic system and deficiency of expendable income right now that the industry struggles mundane to merely maintain in concern. There would be so many companies suffer if United Airlines was liquidated.

The creditors that own the loans would instead the planes be in flight so to be on the land non doing and money. If there is of all time traveling to be a net income to be made with the industry so the high fuel costs are traveling to hold to lessen or they are traveling to hold to suit more people onto a plane to do more net income off of each flight.

Cite this page

United Airlines Case Analysis Sample. (2017, Jul 28). Retrieved from


Remember! This essay was written by a student

You can get a custom paper by one of our expert writers

Order custom paper Without paying upfront