Business Analysis of United Airlines Company

United Airlines is an international airline whose purpose is to connect people and unite the world. United Airlines Inc. , founded on April 6th, 1926, 91 years ago, is the third world’s largest airline. It was originally known as Varney Airlines because it was founded by Walter T. Varney. In 2010, United Airlines was joint with Continental Airlines to create United Continental Holding. Headquartered in Chicago, Illinois it is part of Star Alliance alongside Air Canada, Lufthansa and many other airlines from all around the world. United Express, a branch of the company is responsible for regional flights. More recently United Airlines has been a target of the media following the incident of flight 3411.

Company structure

The organizational structure of United Airlines consists of having the board of director as their highest level followed by the chief executive officer and chief revenue officer. It then goes on to executive vice president-HR and labor relations, and executive vice president-strategy and business development. Lastly, the organizational structure finishes off with the executive vice president-communications and government affairs.

Board of directors: This section of the board of directors has 15 members and their role is to initiate the goals and policies of the company over a certain period of time. This section also includes organizing their strategies in order to make their goals realistic.

Chief Executive Officer: Chief executive officer stands for C. E. O which involves establishing high level strategies. This person is in charge of everything also known for making decisions and arranging the resources and operations of the company. The CEO of United Airlines in Oscar Munoz. He was named CEO of the company on September 8th, 2015.

Executive vice president-HR and labor relations: This level of organization takes care of the human work experiences and needs Of United Airlines.

Chief revenue officer: Chief Revenue Officer stands for CRO is responsible for developing new strategies to ensure that productivity increases and costs are minimized.

Executive Vice President Strategy and Business development: This section in the structure is in charge of leading business strategies.

The executive vice president-communications and government affairs: This organizational structure manages media, advertising and marketing of the company.

United Airlines is responsible for offering air traveling internationally. In order to offer this service, the company needs to meet standards that can tremendously be affected by an incident in the supply chain. The operations managers at United Airlines need to manage the inputs, the transformation processes and finally the outputs, to assure the smooth running of the company. For United Airlines, the main inputs are natural resources such as oil, airplanes and human capital. The transformation process includes selling airplane tickets and provide air travel. The output ultimately is the traveling service.

Environmental variables

Environmental variables are numerous for United Airlines, using the P. E. S. T model it is possible to clearly and concisely observe the variable affecting the company. Political-Legal Environment; if the cost of education rises this affects the corporation as it will have to raise its wages for its skilled employees like pilots and officers. As for environmental eventually laws against certain emissions can cause setbacks to how the company functions. Economic; if there were to be environmental regulations that restrict CO2 emissions, the corporation would suffer because they would have to limit flights and raise prices. Or they would have to pay big fines for breaking the law. Sociocultural; if a terrorist attack were to occur people would less likely want to fly any airline. As well as if a plane crash were to occur people would fear and trust less and would not want to fly. Technological; being a highly competitive industry, they always have to keep up with technology to be able to offer the best services. Also keeping up with new technologies could help minimize operational costs in the long run.

Using the S. W. O. T analysis, we can evaluate the strengths, weaknesses, opportunities and threats of the corporation.

Strengths: major strengths of United Airlines are their strong operational network, they have over 5000 flights a day across all 6 continents. They have strong employee productivity with over 88 000 employees and they have a really good inflight entertainment system, keeping up with the latest technology to keep their clientele satisfied. Weakness: major weaknesses are that severe incidents have occurred in the past as well as very recently. United airline’s planes were used in the 9/11 terrorist attack, this caused many to fear flying with any airline. Recently a man was kicked off his flight, this is making people give a second thought to flying with United. Their financial performance had weakened due to losses and incidents.

Opportunities: some opportunities include the growing tourism and travel industry, people are always looking to travel and discover the world. Recently, in the past decade, it has become more popular. As well as a growing U. S. airline industry.

Threats: major threats are other airlines with cheaper flight options, clients will prefer the more affordable airline. Fuel can be costly, rise in fuel causes costs to fly to rise, causing the number of flights sold to drop. If a recession were to occur, people will be less up to travelling or they won’t be able to afford to travel.

When it comes to ethical decision-making the airline takes the matter very seriously. Employees are not allowed to accept commission or any type of tip/reward for their work from clients. They encourage open communication and honesty. They limit conflicts of interest by not allowing workers to supervise loved ones or family members. If an employee were to have a second job, the job cannot interfere with work hours or performance at united. Employees are not allowed to use United’s resources outside of the workplace for example supplies or company email. They encourage fundraising. United employees must respect the privacy of their customer as well as the information of their company. They claim to “hold themselves to the highest standards in safety and reliability”. Safety is important to them. They spread the message to their clientele that they want to celebrate the journey together.

United Continental Holdings has an oligopolistic competition. The competition is international; however, their main competitors are American Airlines, Delta Air Lines, and Southwest Airlines. They are their major competitors because they operate in the same countries.

The company focuses on creating a sustainable future by being highly involved in the communities they serve, by being environmentally committed, concentrating on technology and facility and coworkers. These factors are very important due to the fact that they operated an environmentally and socially responsible business.

United Continental Holdings offers international transport to its clients. The most popular destinations include Beijing, Chicago, Denver, Houston, Los Angeles, Mexico City, Munich, New York, Paris, San Francisco, Tokyo, Washington D. C. Additionally, United Airlines is part of Star Alliance, an airline alliance which includes airlines such as Air Canada, Lufthansa and Turkish Airlines.

United Continental Holding is a public corporation which regroups 15 members on the board of directors.

Products: United Airlines provides intangible services such as flights, cruises.

Prices: The prices depend on the destinations and the classes (economy, business class). The prices of plane tickets are very elastic so the company tries to offer discounts and will try to lower prices if the demand isn’t high enough. The price of fuel will also have an impact on the customer’s purchases due to the high cost of fuel.

Promotion: They have a lot of special deals with very good prices such as ‘’deals of the week’’ to attract customers. They are also going to offer ‘’Economic Basic Fares’’ which provides customers the best price possible while giving them the same benefits such as food, Wi-Fi and also personal device entertainment.

Place: United Airlines plans on having more destinations and more flights with better connections in order to improve their customers’ flying experience.

Information technology is one of the driving forces of major airlines companies. The Information Technology team is responsible for finding new technologies, improving the current technologies, supporting the technologies in place and troubleshooting. For a company such as United Airline, the Information Technology will focus primarily on system security. It will make sure that the company is not vulnerable to viruses or hackers which could jeopardize the company’s data and its client’s. It will also make sure that all its servers a running smoothly and will monitor the website to look for price errors and/or mistakes made on the website. With the help of the R&D department, the IT department will improve the software found on the screens inside the planes.

One of the main human resources issues for United Airlines are the factors that can cause a conflict to occur when there is discipline involved. There are also problems with performance measurements and evaluations due to organizational influences, personal biases, and their difficulty to set qualitative standards. Other issues that they face with human resources are the problems which personal department has to deal with. These issues include subjective standards, rating errors, and negative communications.

They usually make around $37, $38 billion dollars a year. However, their net income did show some significant improvements. In 2012, even though the total revenue was around 37 billion dollars, the company did not make any profits at all and they actually lost more than 700 million dollars in that particular year. From 2013, they started making profits, starting at 500 million dollars and their net income kept on increasing till 2015, it reached 7 billion dollars (special items included). Unfortunately, their net income of 2016 went down to 2. 2 billion dollars. From 2013 to 2015, the net income growth of the company increased by a lot. For example, in 2014, their net income went up by 99% and in 2015, even much higher, more than 500%. Everyone who reads their income statement would be very surprised about these numbers and they would ask themselves ‘’500%? How is this possible?’’. The reason for their significant improvements is that they did NOT have to pay their income tax during those years. According to The Winglet, ‘’A profitable company may not pay taxes. For instance, years of deep losses can affect a tax bill. Accounting rules allow the airlines to offset taxes due with valuation allowances resulting from losses in past year. ’’ In other words, they took advantages of their losses in prior years to keep them from paying their income tax Income Statement (all numbers in $000).

As presented in the income statement, United Airlines did not do as well in 2016 compared to 2015. Their total revenue dropped 1. 5 billion dollars and their net income growth decreased by 69%. They also had to pay more than 1. 5 million for their income tax where they did not have to pay any tax in 2015. As a result of it, net income of United Airlines went down as mentioned before. June 2016: Their revenue decreased at a significant rate due to their inactivity and slow demand for some markets and in most regions of the world there is overcapacity. Due to this, United margins will be put under more pressure. In conclusion, 2015 was the best financial year for United Airlines so far.

Strategy and future outlook

In the future they plan on making improvements to its operation. They plan on presenting a plan to investors about “today plans for long-term earnings growth” by several strategic actions throughout the airline; improving network connectivity and revenue management, broadening product segmentation and introducing additional costumer enhancements. They are going to start offering basic economy fairs which provides customers with the lowest fares. They also plan to maintain disciplined cost control, this should improve revenue 4. 8 billion dollars by the year 2020. The airline intends to focus on more on time arrivals and fewer cancellations.

On April 9th 2017, the corporation faced a major incident that was raved about highly in the media. A doctor was violently dragged out of flight 3411 in Chicago, after refusing to give up his seat to a United Airline employee. This situation occurred due to an overbooked flight and unforeseen necessities. United Airlines is now facing negative publicity including from the U. S. president himself and a law suit by the doctor. They are losing clientele and facing great consequences. Other than the incident another issue with the airline are many delays on flights due to their system-wide computer problems.