Business Strategy
1. United Airlines is owned by the UAL Corporation and was incorporated on December 30, 1968. The actual company was formed may years before this actually in 1925 and was a private mail carrying service between Pasco, Washington, and Elko, Nevada, and from these humble beginnings they formed a were able to start a company that would come to be a global leader in the airline service. From the 1960’s to the 1980’s the company had 6 different presidents and started to expand and venture into different aspects of business other then airlines and were unable to have any success. These companies that they purchased were not a success and were later resold.
During the late 1980’s United purchased the Pan American Airways
United airlines responded by trying to cut costs which included reducing the number of flights, they eliminated all free services such as providing food and drinks, tightened refund requirements, and eliminated corporate discounts on cheap fares. The company also had to take a look at their high laobor costs, United’s pilots are the highest paid in the industry, and in the second quarter of 2002 labor costs were almost 47% of the total revenue of the company. Even though the company was able to cut costs there was always the rising cost of fuel that was hurting the company and there was nothing that they could do to recoup any of the cost. In 2000 the United Airlines spent over their fuel budget by over 40% and has not been able to budget enough money each year because of the influx in the price of oil. With the company continuing to report a loss they have lost their credit rating which takes away billions of dollars in loan money and also makes millions of dollars in interest due. This is something that has affected all of the major airlines causing a continued loss and decline in the airline industry entirely.
4.Strengths- United Airlines in 1994 became the largest employee owned company in the world. I feel that this is one of their greatest strengths because the survival of the business is put into the hands of the employees. One of the greatest motivators for this