...across the merger between United and Continental airlines. The reason that I choose to do the merger is because I knew that they were going to go through many changes within this merger. Both airline companies have a lot to offer to each other with this merger that they can compete with Delta airlines one of the largest airline in the world. This merger will bring about several changes within both companies. In this paper I will be providing the different changes between both companies with the merger including the culture, systems and unions. Since they were two different companies this will bring on big changes when they finally merger together. History In In the year of 2008 United Airlines CEO Glenn F. Tilton and Continental Airlines, CEO Jeffrey A. Smisek began to talk about merging both company together in order to become the largest merger ever to take place between two airlines. However, once Continental found out about United Airlines declining financial statues they declined their offer. The talk of United negotiating a merger with US Airways stunned the CEO and board members of Continental Airlines. Predictor stated that United Airlines used this tactic to allure Continent Airline to renegotiate the merger that was discussed in 2008. In 2010 a big announcement was presented stating that United and Continental airlines were merging together as one Airline Company. Major of the management team will consist of Continental executives. This merger is just another...
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...Continental Airlines and United Airlines Merger Tony McDougal December 2, 2012 Professor Bates Abstract This paper explains the challenges faced by two major U.S. airlines, United and Continental airlines in an attempt to merge, and form the world's largest airline based in the United States. This consideration is based in relation to the movement of passengers via air traffic. The airline merge occurred in order for each airline to survive and be competitive within the airline industry. The paper explains briefly the reason for this merger, the strategy it used and went through to accomplish the merger. It also explains some pros and cons the merger and management faced. It explains the vision of the newly created company in reference to where they want to be in the future and the profit of revenue they foresee to earn with this merger. This paper outlines the structural change the new United Airlines came up with after the merger took place and how both United and Continental Airlines management, employees, and customers adapted to the merge. Continental Airlines and United Airlines Merger The merger of United and Continental airlines that was under way in 2008 formed the third’s world largest airline. This merge occurred during the decrease of air travel from heightened security measures against terrorism and high fuel costs. During this time, the United States government also tried to help by giving the airline industry monetary...
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...Journal of Industrial Organization Education Volume 5, Issue 1 2010 Article 1 United-Continental Merger Robert J. Carbaugh, Central Washington University Koushik Ghosh, Central Washington University Recommended Citation: Carbaugh, Robert J. and Ghosh, Koushik (2010) "United-Continental Merger," Journal of Industrial Organization Education: Vol. 5: Iss. 1, Article 1. DOI: 10.2202/1935-5041.1034 Unauthenticated | 62.189.189.132 Download Date | 6/6/13 12:08 PM United-Continental Merger Robert J. Carbaugh and Koushik Ghosh Abstract This case study discusses the nature and likely effects of the proposed merger between United and Continental. It is intended as a lecture for instructors teaching undergraduate courses in Industrial Organization or Antitrust Economics KEYWORDS: United, Continental, Merger, Antitrust Unauthenticated | 62.189.189.132 Download Date | 6/6/13 12:08 PM Carbaugh and Ghosh: United-Continental Merger United-Continental Merger On May 2, 2010, the Boards of Directors at United Airlines and Continental Airlines approved a stock-swap deal that will combine them into the world’s largest airline. The combined carrier will have 21 percent of domestic flying capacity, taking the lead from Delta Air Lines, which will lose what had been its leading 20 percent share of the domestic market. The deal still needs final approval from the U.S. Department of Justice and shareholders before being allowed to go forward. The firms hope to complete...
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...Marketing Plan United Continental Airline Marketing Plan Rhunda Mitchell BUS620 Instructor Nichols August 1, 2011 The airline industry has continuously been and is steadily the most intensely competitive business segment in all components of its operations (Morrison, 2000). In commission on real narrow margins the decline in passenger traffic which was embraced by airlines due to the events of September 11th, 2001 has had a direct effect on the many domestic and global airline carriers across The United States (Taylor, 2003). The events that occurred that day created governmental intercession by means of loan assurances, recompense for terrorist attack fatalities, and insurance associated with war hazards (Taylor, 2003). The Associate deputy secretary of Transportation stated that the industry is in its worst financial crisis” (Taylor, 2003), since the industry was deregulated in 1978 (Taylor, 2003). It is imperative to recognize the two conflicting forms of airline carriers within existence in the United States (Taylor, 2003). The major airlines are in reference to those with surplus gross revenues of $1 billion dollars yearly. In general these airlines also provide international services, accommodate the business class customers and passengers who anticipate or covet full in flight services like meals and other related amenities (Morrison, 2000). This includes; American Airlines, Delta Air Lines, United Air Lines, U.S. Airways, Continental Airlines and Northwest...
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...the Financial Hood Continental Airlines Continental Airlines (Continental) was incorporated in 1980. Based out of Houston, Texas, Continental Airlines is fifth largest airline in the world. This is based on the 2009 number of scheduled miles flown by revenue passengers (SEC1). Continental and its smaller divisions offer more than 2,750 departures in the Americas, Europe and Asia. Continental currently employs more than 43,000 people. More than 67 million people per year choose continental as their chosen air carrier (Unknown2). With such a big company comes incredible opportunity for large amounts of profit to be made or lost. Current Happenings Recently, Continental merged with former competitor United. The merger took place May 3, 2010. This merger was created to provide customers with a higher quality of service, improve career opportunities within the company and to improve profitability and shareholder value over a longer term (Unknown2). The related costs associated with the merger, and other unique charges, was $24 million. The majority of these costs were related to financial advising fees, legal fees, and consultant fees, cost of communication and accounting fees. The merger is expected to bring between $800 million and $900 million in revenue annually (Unknown1). Current Financial Performance – 2010 The second quarter for 2010 proved to be extremely profitable for Continental in comparison to the same quarter in 2009. Including the merger-related costs, a net...
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...We have a positive fundamental outlook for the airline industry. In 2009, the S&P Airlines Index increased 27.43%, versus a 29.03% rise for the S&P 500 The airline industry is highly cyclical, and the level of demand for air travel is correlated to the strength of the U.S. and global economies. According to the S&P, it is expected that an improving U.S. economy continues to drive improving air travel demand over the next few months beginning at the end of 2009. At the end of 2009, the reported traffic statistics at many major carriers showed improving demand and revenues . Therefore, it is reasonable that the U.S. airline industry could be undergoing the start of fundamental industry demand improvement. In addition, since the industry has already reduced capacity levels, it should be able to raise fares as passenger travel demand improves. Even though oil and jet fuel prices is up sharply from 52-week lows, they are still notably lower than in 2008 , which should ease cash usage throughout the group and allow good entry points into new fuel hedge positions, thereby offering protection if oil spikes again. According to S&P, the top 10 U.S. carriers lost about $5 billion in 2009, after a $4 billion loss in 2008, as the benefit of lower jet fuel costs was eroded by lower airfares and falling passenger levels. Results in 2008 were impacted by record high oil prices. Airlines have cut fares in response to weakening demand, but we think recent cuts to domestic and international...
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...The main cause that makes a company have to make changes is the external environment. It usually forces organizations to make changes to its mission, culture, leadership, and operating strategies. Changes in the 12 drivers bring a series of change to the overall structure. Changing anyone of the 12 “pillars” will influence the adjoining ones. But, changing the entire structure may or may not affect the entire system. These changes are influenced by the motivation of the individuals. They will impact the change to the entire organization. They all interact with each driver on the model. The Burke-Litwin Model has these basic parts that make up an overall change for a company. Change effect one part and then affect the overall performance of the model. 1. External environment: The key external cause on the organization must be identified and clearly established. 2. Mission and Strategy: The overall “vision” should be seen through the eyes of the employee. 3. Leadership: Leadership should be understood. 4. Organizational Culture: This should understand implied rules, regulations, customs, principles, and values. 5. Structure: The function based structure should be understood, such as responsibility, authority, communication, decision, making, and control structure. 6. Systems: This includes all the policies and procedures. 7. Management Practices: How the management accepts and conforms to the overall concept of the organizations strategy. ...
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...answering questions 1 through 5. 1. (35 points) Combining Continental and United Airlines is tremendously difficult, largely because of the enormous number of things two airlines may do differently. Employees from both Continental and United are working side by side to answer many questions. Will passengers board flights back to front or window, middle, then aisle? Will miniature ponies be allowed? What information will be printed on a boarding pass? What direction will dog crates be faced when loaded in to cargo? Continental and United business architectures are unique to each company. Describe specifically what “the new United,” as a merged airline, must do to form the business architecture for the largest carrier in the world. Make sure you include in your description the role of standardization and integration in transition from the current As-Is to the emerging To-Be business model. | 2. (35 points) Information technology tends to be the thorniest part of an airline merger. The flight information systems and the passenger information system are critical applications (systems) supporting airline operation. Jeff Smisek, Continental CEO, was named the head of “the new United,” and he has heard a lot about cloud computing and virtualization. Mr. Smisek has learned that competitors are implementing cloud computing and virtualization concepts to streamline IT operation and alignment. In order to expedite merger and integration, Mr. Smisek assigns you the task of defining...
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...Antitrust Law Anti-trust law is a law designed to ensure free competition in an open market. The first anti-trust laws have emerged in the United States at the end of 19th century: some companies were so powerful that they had a monopoly or quasi-monopoly in the sector. Companies like Standard Oil and American Tobacco have been dismantled through anti-trust laws. In addition, the antitrust laws prohibit price fixing between competitors. In 1934, Boeing became a large enterprise, producing aircraft engines, carrying mail, dealing with airports and ensuring many airlines. But under pressure from anti-trust law prohibiting manufacturers to operate airlines, its creators sold their holdings and "United Aircraft and Transport" got divided into three entities: * United Airlines responsible for air transport * United Aircraft responsible for manufacturing in the East * Boeing Airplane Company responsible for manufacturing in Western countries. United Aircraft and Transport Corporation is a vertically integrated group, present in all sectors of aviation. In 1934, an anti-trust law is to separate aircraft manufacturers companies carrying mail, and forces the company to split into three entities, * United Air Lines in 2011, which is the largest airline in the world * United Aircraft Manufacturing Corporation, which later became the United Technologies Corporation * Boeing Airplane Company, which became in 1941 The Boeing Company. Case example of Air France / KLM ...
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...WHY CONTINENTAL: A $385 million loss for the final months of fiscal year 1994 signalled Continental might go bankrupt. Continental was in dire straits because the deregulation of the commercial airline industry in 1978 ushered in a new era focused on mergers and acquisitions and bitter employee-management relations. Venerable airline brands with a commitment to quality, like Continental, were prime takeover targets. After Texas Air Chairman Frank Lorenzo (HBS 1963) secured Continental in his hostile takeover bid, tensions escalated between Lorenzo and the old guard--especially when Lorenzo declared Continental bankrupt in the fall of 1983. In October 1994, five months after Continental exited its second bankruptcy, Bethune was elevated to CEO and created a Go Forward Plan to return Continental to profitability. Two years after unveiling the Go Forward Plan, Continental was at the top of the industry in a number of important performance metrics. KEY ISSUES: Continental ranked tenth out of the ten largest U.S. airlines in all key customer service areas as measured by the Department of Transportation: on-time arrivals, baggage handling, customer complaints, and involuntary denied boardings. The airline had already been in bankruptcy twice, and was headed for a third round as its cash dried up. STRATEGIES FOLLOWED FOR TURN AROUND: The turn-around plan — the Go Forward Plan 'A' — had four different elements each of which were given an inspirational title : ...
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...February 2013 US Airways and American Airlines announced their plans to merge the airlines creating the largest airline in the world. US Airways was founded in 1937 as All American Aviation and in 1996 commenced operations as US Airways with its parent company being US Airways group. The headquarters is located in Tempe Arizona. US Airways operates an intensive international and domestic network and has 198 destinations throughout North and South America, Middle East and Europe. Us Airways is a member of Star Alliance Network with a fleet of 346 mainline jet aircrafts and 256 regional jet and turbo prop aircrafts. Us Airways has a shuttle that provides hourly service between Boston, New York, and Washington, D.C. that is known as US Airways Express that is operated by contract and subsidiary airline companies. As of January 2013 US Airways employed 32,213 individuals worldwide and operated 3,028 daily flights. American Airlines, Inc. is owned by the AMR Corporation headquartered in Fort Worth, Texas. It operates and extensive international and domestic network as US Airways. American Airlines has scheduled flights throughout North America, South America, Europe, the Caribbean, and Asia/Pacific. The Dallas/Fort Worth International Airport is the airlines largest hub with American Airlines accounting for about 85% of the traffic and 83% of landing fees and travel to more destinations than any other hub. American Airlines operates maintenance bases at Tulsa, and Fort...
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...Evaluation of Alternatives 37 Recommendation 38 Decision Implementation 39 References 40 Introduction Delta Airlines was founded by C.E. Woolman, an agriculture extension agent (Anthony, Kacmar, & Perrewe, 2010). C.E Woolman was not a banker, venture capitalist or war pilot, as many of the competing airlines were. He didn’t have the aggressive military style that many of the other airline founders had. What C.E. Woolman instilled within the employees at all levels of the organization is that people matter and should be treated fairly and equitably. This philosophy led Delta Airlines to be the leader in customer service from the company’s inception through the many mergers over the years. Through the difficult financial times when other airlines were laying off employees and filing for bankruptcy, Delta continued to pay their people well and keep them employed. There was an exception during the Ronald Allen CEO era of 1987 thru 1997. Human relations took a significant down turn during his tenure as CEO, especially during 1993 and 1994, but Delta decided to part ways with Allen and began repairing those fragile relationships with its employees. Delta Airlines still focuses on the human relations factor and has been able to repair the relationship with its employees, they believe it is their key to success. External Environment General The airline industry is a fast growing sector demonstrating a very strong growth rate. It is associated with a number of social...
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...___________________________________________________________________________________________ English - Or. English DIRECTORATE FOR FINANCIAL AND ENTERPRISE AFFAIRS COMPETITION COMMITTEE DAF/COMP(2014)14 Unclassified AIRLINE COMPETITION -- Background Paper by the Secretariat -18-19 June 2014 This document was prepared by the OECD Secretariat to serve as a background note for Item IX at the 121st meeting of OECD Competition Committee on 18-19 June 2014. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries. More documents related to this discussion can be found at http://www.oecd.org/daf/competition/airlinecompetition.htm. English - Or. English JT03358883 Complete document available on OLIS in its original format This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. DAF/COMP(2014)14 TABLE OF CONTENTS Introduction ................................................................................................................................................. 3 1. Features of the airline industry ............................................................................................................. 4 1.1. Liberalisation of the air transportation industry .......................................
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...to protect economic freedom and opportunity by promoting free and fair competition in the marketplace. Competition in a free market benefits American consumers through lower prices, better quality and greater choice. Competition provides businesses the opportunity to compete on price and quality, in an open market and on a level playing field, unhampered by anticompetitive restraints. Competition also tests and hardens American companies at home, the better to succeed abroad. Federal antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. They prohibit a variety of practices that restrain trade, such as price-fixing conspiracies, corporate mergers likely to reduce the competitive vigor of particular markets, and predatory acts designed to achieve or maintain monopoly power.” http://www.justice.gov/atr/about/mission.html Although I would mostly agree with the Antitrust Laws, the two cases which I...
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...organization because it’s the most flown airline within the United States and has been consistently profitable (Northouse, 2009). Southwest is ranked 205 in the Fortune 500 and their profits in 2011 were 459 million which exceeded their 2009 profits of 363.6 million (CNNMoney, 2011) Against industry problems and business pressures-air-traffic congestion, merger of rivals, stricter government regulations regarding aircraft safety and maintenance, and mounting customer dissatisfaction with airline service, Southwest has managed to continue climbing to the top. The company strategy from day one was to be an airline that pursued a low-cost/low-price/no-frills strategy. This strategy opened their market segment to a larger portion of the U.S population and gave the company their tag line “The Freedom to Fly” (Northouse, 2009). Southwest also known as “the love airline” first took flight in 1971. Herb Kelleher, initially a lawyer retained by the airline to get it off the ground, was running the place by 1978. The airline was initially known for sexy flight attendants in hot pants to gain attention before it became the leader in low cost fares. "You can have a low-cost carrier and people still don't fly it because they don't know about it," Kelleher said. "And so, the schtick kind of fit in with getting known" (CBSNEWS, 2012). The airline now employs 34,000 people, services 64 different facilities, owns 500 planes, and is the nation’s sixth largest airline. Southwest has also been known for...
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