Capital Management

Length: 1098 words

The Airline has also gone ahead to advertise itself in the gay papers (1rvine 2000). The idea was to woo back into the plan the gay and lesbian travelers. They did not stop at that but went further to create a “Rainbow TeAAM” to market itself to the gay community. UA has embarked on new projects to counter the bad times, it launched a brand new “low cost carrier, Ted” in November 2003 and a year later a luxury” premium service-p. s” to capture the clients plying the coast-to-coast rout, particularly businessmen. A lot of changes have been sported in United’s corporate structure.

Other steps being considered for action include the following: – Spinning off Cargo division, Diversifying Centers for maintenance, overhaul or repair operations and finally spinning off the Mileage Plus frequent Flier program (Chicago Tribune, 2007). The United Airline cargo has got into several mergers to help it revamp and restore its previous status. On the 14th November 2007, Pardus Capital Management LP (a hedge fund which owns 5. 6 million shares of United and 7 million shares of Delta) called on to the two carriers to form a merger. After the merger the shares of

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the two airlines shot up (. www.

ajc. com/businesscontent/busin). On 19th February 2008, Westin Hotels ; Resorts went on a renewed partnership with United. Westin agreed to offer classy bed lines on the p. s routs. With the inability to secure any financial aid, UAL filed for the Chapter 11 Bankruptcy protection , blaming their fall on the September 11th attack. They claimed that it is the attack which triggered the financial crisis that they were then experiencing. Of cause it is an open secret that the 9/11 was not the sole reason for the ugly scenario, but the management insisted that it was the major one if not the only cause.

Some of the factors that led to the crises were reported to be: – the increase of low cost carriers, the never ending labor disputes and the wrangles within the management structure. The Airline did not stop their operations but continued to work in that business environment that was already suffocating them and threatening to drive them into extinction. They were therefore forced to drastically cut their costs, lay off workers in their thousands and finally close most of the US city ticket officers. Just planned as well as the already existing routs were canceled…

the Latin America gateway and the flight crew base in Miami International Airport were completely scraped in March 2004. The Airline cut the U. S flight capacity by 14 percent and replaced it with more profitable international flights. The company closed their maintenance bases in Indianapolis and Oakland and transferred all the work to the San Francisco Maintenance Operations Center. As if that was not enough, they results of the post attach (9/11) period witnessed the fall in mainline fleet from 557 down to 460 aircrafts (Moldrem 28).

Acting within the concept of the Chapter 11 Status, the United Airline involved their employees, suppliers and contractors into hard-to-cut costs which included cancellation of feeder contracts. The mother of all controversies was yet to come in 2005 when the then CEO renegotiated the terms of employment of pilots and mechanics, he also terminated the pension plans. The CEO, Glenn Tilton was greatly criticized for his call to cut employees salaries while he was receiving the pay of all US airlines (www. fobes. com).

Things only began looking brighter for the Airline in 2005 when the bankruptcy court extended them a right to file a reorganization plan from 26th August 2005 up to 1st November the same year. By the first day of February 2006, the company began their path to full recovery and normal operations. Though shaken up to its very foundation, the United Airlines are bouncing back. The strategies that they have put in place are working for them. They have heavily invested in Information Technology and the introduced of E-Tickets which has led to efficient service delivery to their clients.

The online booking has also contributed a lot to their growth (Warner, 1998). Operations in hubs of San Francisco, Denver and Chicago have been boosted and the new hub in Los Angeles expanded to connect the City to the four corners of the Globe. Holding about 55% of the company’s stock, the workers/employees bargaining power increased significantly and they could call for any form of betterment of their welfare. But this did not go for long; it was just a temporary lift. When the company was wiped out by bankruptcy, the employees rank and files got locked in the stock were no more (Lee 1997).

Conclusion The United Airline Cargo has never had a smooth run in last two decades. From a company that was considered the hub and home of success to one which could barely survive. Several forces acted against them-be it internal, local and international forces (Heppenheimer 1995). Their financial position was strained further by the outbreak of the SARS epidemic in 2003 when they were just beginning to revive the fallen company. The general effect depressed the overall air traffic in the Pacific network.

With the jet fuel prices soaring, it consumed United’s savings and profits fell… the management were left with no choice but to hike the fares on oversea routs in 2004-2005… This also came with its negatives impacts, many passengers shunned UA for cheaper options. It has been a journey of hills and valleys for the once prestigious Airline. The bad economic dust was just about to settle, but just like the biblical plague where one disaster strikes after the other, the UAS found themselves into yet another trouble.

The customer’s confidence on the airline was beginning to grow when the report of the ACSI (American Customer Satisfaction Index) brought everything back to squire one. The reports that were released in May 2008 revealed that United Airlines was at the very bottom in customer satisfaction among all US-based airlines [a real shot in the arm]. Scooping points that indicated an 11% decrease from the previous year and 21 percent decline since the study began in 1994 (. www. ajc. com/businesscontent/busin). By September same year (this year-2008) they had grounded the entire fleet 96 aircrafts of 737 and 30 of the 747s.

It is the prayers of the top brass management, employees and other stakeholders that United Airlines Cargo will not be part of our history.


Bilstein, Roger. (1994)“Flight in America: From the Wrights to the Astronauts”, Rev. ed. Baltimore: The Johns Hopkins University Press, 124-187. www. ajc. com/businesscontent/busin. Retrieved on 12th December 2008 United Chief Chases Change” , Chicago Tribune, October 19, 2007 www. usatoday. com/travel/news/2006-03-10-ual-bancrupcy-fees. x. htm. Retrieved on 12th December 2008.

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