Turbulent Times for United Airlines

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Case Details:

Case Code : BSTR308
Case Length : 17 Pages
Period : 1970-2008
Organization : United Airlines
Pub Date : 2009
Teaching Note :Not Available
Countries : United States
Industry : Aviation

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"This environment demands that we and the industry act decisively and responsibly. At United, we continue to do the right work to reduce costs and increase revenue to respond to record fuel costs and the challenging economic environment."¹

- Glenn Tilton, Chairman, President and CEO, UAL Corporation² and United Air Lines Inc., in June 2008.

"No matter how rough the ride for United's employees and passengers, it will continue to be smooth sailing in the executive suite."³

- Joe Brancatelli, Business Travel Columnist, Seat 2B,⁴ in June 2008.

"I think it's the UAL labor-dynamic playbook. It's been that way for a long time. Just change 2008 to 2000 and it was roughly the same story."⁵

- Robert Mann, Aviation Consultant, in August 2008.

Introduction

In April 2008, United Airlines (United), one of the oldest and largest airlines in the United States, reported a loss of US$ 537 million for the first quarter of 2008 compared to a loss of US$ 152 million in the corresponding quarter of 2007.

The loss was reported to be the highest ever incurred by any airline in the first quarter.⁶

The company cited increasing fuel prices as the main reason for the loss, as its expenses had shot up by US$ 618 million.⁷

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1] "United Airlines to Slash Fleet, Jobs as Fuel Prices Soar," www.chicagotribune.com, June 4, 2008.

2] UAL Corporation (UAL), an airline holding company, was incorporated on December 30, 1968. It was headquartered in Chicago, Illinois. As of 2008, UAL offered airline services through its various subsidiary companies like United Air Lines Inc., Air Wis Services Inc., Four Star Insurance Company, Ltd., Four Star Leasing, Inc., UAL Benefits Management, Inc., UAL Company Services Inc., etc (Source: http://www.united.com).

3] Joe Brancatelli, "Worst Airline Management Ever," www.portfolio.com, June 10, 2008.

4] Seat 2B is a business travel column in www.portfolio.com, a business and management related website.

5] Julie Johnsson, "United's Pilots Want Tilton Out," www.chicagotribune.com, August 12, 2008.

6] "United Airlines Losses Prompt Job Cuts," www.get-packing.com, April 23, 2008.

7] "United Airlines to Slash Fleet, Jobs as Fuel Prices Soar," http://news.google.com, June 4, 2008.