Introduction October 1st, 2010 was an important date in the history of airline business industry as two of the World‟s best airlines, United Airlines and Continental Airlines to form the new United Continental Airlines in order to deliver consequential prosperity and profitability while maintaining a sustainable long-term significance to their esteemed stakeholders across the globe. United Continental Holdings, Inc. is the investment company for Untied Airlines and Continental Airlines served by more than 86,852 employees and operating the secondlargest fleet with 702 aircraft having the headquarter sin Chicago, while its core operations are from Houston in the United States of America. United is a beginning member of the Star Alliance, the major airline alliance in the world, and proposes connections to over 1,000 destinations in over 170 countries worldwide (United Airlines, 2012). United was the first airline to begin Boeing's new 777 airliner, with a flight from Washington, D.C. to London on June 7, 1995. It has also played vital roles in the international market. In 1997, , it combined with Air Canada, Germany's Lufthansa, the Scandinavian Aircraft System (SAS), and Thai International (later connected by Varig of Brazil) to create the Star Alliance to offer a common network of world-spanning routes. United placed a number of years of profits in the late 1990s but, because of an economic downturn in Asia, the airline's increase in profits has decreased. At the end of the century, United sustained to be one of the most significant players in domestic commercial aviation (Siddiqi, n.d). Presently, Jeff Smisek is President and Chief Executive Officer of United Continental Holdings, Inc., the holding company for both United Airlines and Continental Airlines.
Mutually with their provincial partners, these both airlines functions a total of approximately 5,675 flights a day to 372 airports on six continents. Smisek is also a member of the United Continental Holdings, Inc. Board of Directors. He became President and Chief Operating Officer in September 2008 and take for granted the role of Chairman, President and Chief Executive Officer in January 2010. He was also selected as Aviation Week‟s Person of the Year for 2010("Biography," 2010).
Company Background Continental Airlines Company was incorporated in the early 80‟s of the 20th century and presently one of the most important airlines operated in US along with a business range of transporting passengers, cargo and mail handling operations. On October 1, 2010, UAL Corporation concluded it‟s getting hold of of Continental Airlines and changed its name to United Continental Holdings, Inc. The airline acknowledged a single operating certificate from the FAA on November 30, 2011 (FREED, 2011). On March 3, 2012, Continental and United compound their passenger service systems, frequent-flier programs, and websites which officially removed the Continental name and brand as far as the public was concerned (Riegler, 2012).
Mission and Vision Statement Vision: “To be recognized as the best airline in the industry by our customers, employees and shareholders” Be carefully analyzing Continental Airlines vision statement, customers can obviously interpret that they hope on happening the best in what they do. Continental Airlines aim to achieve the final level of pleasure from not just its customers, but also from its employees and shareholders. Its vision statement gives significance on both its interior and exterior customers cautiously stress their significance to their successes. Continental has discovered the reality that many companies be likely to overlook, that is, so as to be successful in the airline industry they will have make sure the satisfaction of its employees, who in order will convey quality services to their customers that will make them to come back for these services time and again. Mission: Although Continental Airlines makes an clear name in the airline industry, it does not have a predefined mission statement. It has established a vision, as stated above, and it has a variety of strategies that it sticks by that make it possible for it to work towards this vision. However, from a cautious study done on its overall business operations and its guiding principles and values, we can assume that Continental Airlines mission is to be the kind of airline customers want to fly on, and the airline people want to work for. This also undoubtedly portrayed in their vision, and hence is a ideal fit as Continental Airlines Mission Statement.
The “Go Forward Plan” Continental‟s basic element for success. This ever changing, four point plans allows the company to prepare and exceed its goals. Since it‟s development in 1995, this has led the company to much greater heights of distinction in terms of service and finance. The “Fly to Win” factor highlights the requirements to reach top quartile industry margins. This means that they hope to enlarge their international airline connectivity and go on eliminating non value added costs. The “Fund the Future” aspect focuses on developing continental‟s franchises and set the stage for future growth. In addition, it focuses on their fleet map and drone real state and make sure the well-built cash flow and financial flexibility. The “Make Reliability a Reality” element puts forth the principles of making an industry leader of a product that Continental is arrogant to present. In addition, they aim on becoming at the top in terms of on time arrivals, baggage handling, complaints and involuntary denied boarding‟s. They also hope to get better their product every chance they get, and in turn improving their overall company reflection. Finally their “Working Together” element states that they want to promote a culture where people enjoy coming in for work every day and are acknowledged for their contributions in the company‟s triumph. In doing so, they want to place an importance on safety, employee programs and communication. Following are the Major recognized external opportunities and threats of Continental Airlines. Identifying these factors help the company to assess its current position in the competitive market and encourage the management to analyze the current market in order to set the strategies and goals also these are they points to evaluate the industry analysis the external factors evaluation.
Environmental effects Political-Social-Economic Political No
Factors Labor cost.
1
2
Chapter 11 – bankrupt protection
3
New EU US open skies treaty
Case Issue Continental Airline’s labor costs may not be competitive. Chapter 11 bankruptcy allows airliners to achieve substantial cost reductions through, among other things, reduction or discharge of debt, lease and pension obligations and wage and benefit reductions EU-US Open Skies policy would present opportunities to airliners to expand their service horizon.
Finding Opportunity
Opportunity
Opportunity
Social No
Factors
1
Discouragement to air fly
2
Terrorist Attacks
3
Economic slow down
4
More demanding
Case Issue Terrorist attacks have increased risk and Public
health threats are affecting travel behavior. September 11 affected the sales of airliners Global environmental issues are influencing the way airliners conduct their business and operation. Nowadays, customers are more demanding in terms of quality service expectations and the advance of ICT has also given customers more buying power and selections
Finding Threat Threat Threat
Opportunity
EconomicalNo
Factors
1
Competitive force
2
Terrorist Attacks
3 4 5
Economic slow down Competitive forces Loss of profit
Case Issue New Low Cost Airliners present new competitions to Continental Airlines Additional terrorist attacks or international hostilities may further adversely affect Continental Airline’s financial condition An economic downturn could result in less demand for air travel. Low cost carrier Highly competitive and less attractive domestic market
Finding Threat Threat Threat Opportunity Threat
The Effect of Economic Crisis The confusion of the Recession led companies to restrict travel and forced leisure travelers to tighten their budgets, leaving little discretionary spending. Volatile fuel prices had a eternal impact on the airline industry also. Although many experts believe that the recession is over, there have been concerns regarding double dip recession. Economic problems in the rest of the world and recent dismal data regarding jobs, housing and consumer spending have raised the concerns for another recession. United has just come out from the bankruptcy. United may not withstand another recession, yet alone the merger with Continental. Therefore, united must carefully craft an alternative strategy to coup with another recession.
S-W-O-T Analysis
Strength 1. The fact that the airline provides customized services in accordance to the destination it‟s travelling to. 2. The company rose to profitability after being hit severe losses for four years straight. 3. The fact that the airline provides customized services in accordance to the destination it‟s travelling to. 4. Its various incentive programs to keep its staff motivated to aim towards on-time arrivals. 5. The fact that it serves more international markets than any other U.S aircraft. 6. Received an array of awards for service quality and overall reputation. 7. Increment in gross profits and reductions in overall costs.
.
Weakness 1. The fact that its „Go Forward‟ plan does not attend the environmental issues directly. 2. The airline has faced a decrement in its overall AQR scores. 3. Service quality has also faced a decline. 4. It has been recorded that continental has poor on-time performance, despites its efforts. 5. Lack of internal training for the employees 6. Minimal presence in major foreign destinations.
Opportunities 1. Continental airlines should consider researching the international make, as they face intense competition from the local market. 2. The installation of winglets in an attempt to lessen costs. 3. The “EU-US Open Skies‟ provides Continental with an opportunity to broaden its base in terms of connectivity. 4. Growing demand for travel at 3.2% growth in 2011 5. 42% increase in the Hispanic population in US over the last decade.
Threats 1. Rise in the fuel costs and domestic competition 2. Elevation is security costs due to the risk of security due to terrorism. 3. The fact that its rival have recovered from bankruptcy and recovered back much stronger due to their ability to reduce their costs. 4. The introduction of new aircrafts by the rivals and the fact that this would directly contradict Continentals young and more fuel efficient aircrafts 5. Entry of international airlines into the domestic services 6. Ongoing pricing competition of budgeted airlines in the market. 7. Airline industry as a whole vulnerable to economic cycles and big swings in bottom-line performance.
Main competitors Southwest Airlines (NYSE): The number one domestic airline provider with low cost fair flights throughout U.S. The airline was established in 1967adopting its current name in 1971 and as of June 5, 2011 is the largest airline in the United States based upon domestic passengers carried. In May 2011 the airline get hold of Orlando-based AirTran Airways, with full combination of the carriers taking place over several years, and on March 1, 2012, the company was issued a single operating certificate meaning that from a technical standpoint, Southwest and AirTran became one airline. American Airlines (AAL/AA): The fifth largest airline in the world based on available seat miles and revenue passenger miles on an average day. AMR is the parent company of American Airlines and headquarter in Fort Worth, Texas. American was the last of the remaining legacy airlines in the US to file for bankruptcy, and thus there are no remaining legacy carriers that have not taken advantage of Chapter 11. Delta Airlines (DAL/DL): Delta Airlines is the major airline in the U.S, headquarters in Atlanta, Georgia. It is the world's largest airline according to fleet size, and the world's largest airline in relation to the scheduled passenger traffic. Delta and its subsidiaries, with approximately 80,000 employees, operate over 4,000 flights every day. Delta is a beginning member of the SkyTeam coalition and has the allegiance program SkyMiles.
Market Share 18 16 14 12 10 8 6 4 2 0 Delta
Southwest
American
US Airways
Jetblue
The main financial statement and ratios
Social Responsibility ِAs an intern national Airlines, United Airlines‟ Corporate Social Responsibility report - Every Action Counts(SM) -stress their actions and obligations to business ethics and leadership, safety, customer pleasure, employee development and opportunity, community engagement, and environmental responsibilities. Every Action Counts(SM) point out the attention to United's improvement toward making a significant changes in the cities and communities where its people live, work, travel, and do business. It demonstrates the company's hard work to attain industry leadership in safety and customer satisfaction; its ongoing support to their communities to deal with important economic and social needs; and the development in executing accountable environmental proposals that decrease impact in the air and on the ground.
Recommendations The overall strategic analysis of Continental Airlines reveals that current recommendation for the horizontal integration strategy which in merging in this case would boost the sales over the years and the company can have a significant control over the entire air transport operations in the domestic airline market of United States as well as in the international airline operation as well. The expected growth of company will definitely become a threat for many of the domestic air carriers in the United States and it will increase the overall market share of the company in the coming years.
Reference United Airlines. (2012, April 21). In Wikipedia, The Free Encyclopedia. Retrieved 17:45, April 23, 2012, from http://en.wikipedia.org/w/index.php?title=United_Airlines&oldid=488485681 Siddiqi, A. (n.d.). United airlines. Retrieved from http://www.centennialofflight.gov/essay/Commercial_Aviation/UnitedAirlines/Tran16.htm Biography. (2010). Retrieved from http://ir.unitedcontinentalholdings.com/phoenix.zhtml?c=83680&p=irolgovBio&ID=204741 FREED, J. (2011, November 29). Pilots: United gets single operating certificate. Retrieved from http://news.yahoo.com/pilots-united-gets-single-operating-certificate231520061.html Riegler, P. (2012, March 04). United and continental complete computer system and web site merger. Retrieved from http://www.frequentbusinesstraveler.com/2012/03/united-andcontinental-complete-computer-system-and-web-site-merger/
