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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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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Introduction Contd...

It added that it was working on new cost cutting measures, in addition to those, such as job cuts and reducing employee wages, which it had already taken.

United was the first commercial airline in the US and was created on April 6, 1926, as Varney's Airlines (VA), a transporter of air mail across the US.

Later VA was acquired by United Aircraft Transport Corporation (UATC).8 United flourished in the 1950s and 1960s. In 1961, it became the world's largest airline after merging with Capital Airlines.9

However, United started facing troubles in 1970, when for the first time, it made a loss of US$ 46 million. This was followed by several years of losses.

In 1978, the Airline Deregulation Act10 brought in more trouble in the form of increased competition. In the late 1970s, United also started facing labor problems, something that was to plague the company for years to come.

In the 1980s and 1990s, instability at the top level management and labor disputes saw the company incur losses, although some years in the mid-1990s were profitable.

The company also started a low cost airline called Shuttle by United, developed its Information Technology (IT) system, and entered into mergers and alliances during this period...

Excerpts >>

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8] "United History,"http://www.united.com.

9] Capital Airlines was an airline which operated in the eastern part of the US. In 1961, before its merger with UA, Capital Airlines was the fifth largest airline in the US.

10] The Airline Deregulation Act came into effect on October 24, 1978. The act was created primarily to remove governmental control in the commercial aviation industry and encourage competition in the passenger airline industry.


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