United Airlines - Literature Review

History

United airlines is the fourth largest airline worldwide. The global player operates both domestic and

international flights. The airlines operates cargo airplanes and passenger airplanes. United Airlines

was founded in 1926 by Walter T. Varney, originally under the name of Varney Airlines. On April

6th 1926, the newly founded corporation departed its first flight, which makes it one of Americas

oldest commercial airlines. Ever since the company introduced innovative practices which

revolutionised the aviation industry. In the 1930’s United added female flight attendants to their

flights, creating new job opportunities for women. United also became the first Airline to

implement flight-path simulators and the first to hire an African-American pilot. As the airline

continued to grow, it became the first to fly to all 50 states. Even in recent years, United has not

stoped to innovate. In 2016 United became the the first U.S airline to depart commercial flight,

powered with biofuel. In 2020 the airline is pioneering the industry by adding interactive maps to

their flights which are showing travel restrictions due to COVID-19.

Competition

Despite being the fourth largest airline world wide, United has been confronted with numerous

issues over the past years. One obvious issues is that United is being outperformed by Southwest

Airlines, Delta Airlines and American Airlines, which are considered its closest competitors.

American Airlines is leading the domestic market share within the U.S. with 17.8. Just slightly

lower is Delta with 17.3%, felled by Southwest with 16.8%. Behind its competitors, United secures

a 14.3% market share. ( Zhang, B. March,2019) Due to the COVID-19 pandemic, the aviation

industry has seen a national average decrease of 50% within the U.S for passenger flights. This

pandemic should affect United and competitors in a similar manner. To reduce operating cost,
thousands of employees have already been laid off, and around 7400 accepted voluntary leave

packages.

Brand Culture

In recent year United has had many internal and external issues which resulted form bad customer

service and scandals, leading to poor customer satisfaction. Many employees have publicly referred

to the working environment as abysmal. This is a reflection of their top-down culture which is being

practiced. The airline is being sued by two of their own employees, who both have been with

United for over 25 years. According to employee reports brand culture is overrun with with

discrimination, harassment and retaliation. (Singh,B, September 2020) Discrimination is most

common within the cabin crew, where employees are hired based upon their looks. This is

especially true, when flights are transporting sports team. On those flights, United carefully picks

young, good looking, and blond cabin crew members. This poor working environment is one of the

leading causes for the underdeveloped brand culture.

Public Image

Externally the company is not reflecting a professional brand image as various scandals in

connection with United surface continuously.. The one which caught the most attention occurred in

2017, when United violently dragged a customer from one of their oversold flights. Other

passengers filmed this action initiated by United and the video went viral. When the situation got

more heated, United paid the customer serval millions as a settlement, to reduce the negative press

it had been receiving. Additionally, it also attracted much tension after it the airline accidentally

killed a passengers dog. In this incident a crew member, advised a passenger multiple times, to

place her dog into the overhead storage. The crew member was unaware that there was no oxygen

flow present in the storage, which unlimitedly cause the dogs death. Additionally, the airline is

known for frequently misplacing pets. Even Schoolboy Q, a highly successful rapper, had lost his
dog, because United placed it on the wrong flight. He tweeted about the incident, and many fans

replied with their distrust of the airline. In 2015 one of the United employees purposely pushed an

employee to the ground. (Matousek, M., March 2018).

Customer Satisfaction

Due to its bad public image, United is not known for great customer satisfaction. When looking up

online reviews, it becomes obvious that the customer service is a big issue. Employees were ofter

describes as incompetent, rude and show casing lack of interest. In efforts to increase customer

satisfaction, the airline has dropped its change fee in September 2020. The idea to differentiate itself

from its competitors backfired, as Delta and Southwest implement the same change to their

operations use days after. In recent months United implemented another change which received

criticism across the Internet. The airline will leave it up to the customer to decide whether his carry-

on will be acceptable for the flight, or is too big and needs to be checked in.

Capital

Having limited resources for times of crisis has been an issue for United. With the drastic decrease

in sales, it started making such big losses, it could not come up with the needed capital. This why

United receives 5 billion dollars in the spring of 2020, as governmental founding aid. The founding

plan expires on October 1st, and as of now, it is not expected to be extended or renewed.

(Rappeport, A., & Chokshi, N. April, 2020)

To compensate for the decrease in revenue the airline has announced it will layoff another 16370

employees, which will reduce its operating capacity by roughly 50% compared to 2019. CEO Scott

Strict said September 22nd 2020, he is predicting United to operate at 50% capacity for the next 15

months.
Stock ULA

The flight regulations due to the virus have had a huge impact on sales, especially international

flights. The lack of sales and decreased revenue has been reflected on the stock price. UAL was

once sold for $96,70 a share on 30th November 2018, and on May 15th 2020 the corporation

reached an 5-year low of $19,92 per share. Such rapid decrease in value causes shareholder, to sell

their shared, driving the stock price down even further. With an ongoing insufficient development,

the company experiences difficulties, trying to find new investors.

Profitability

Solely in the second quarter of 2020, the airline reported a loss of $2,6 billion, which is roughly a

75% decrease in revenue from its prior year quarter. The income statement of the third quarter has

yet to be published, but specialist at Bloomberg and similar institutions, predict even bigger losses

than in the previous quarter. Fox business predicts that revenue will be down by as much as 85%

from previous year quarter. (Manfredi, L. September, 2020) In efforts to minimize losses, United

operated around 5000 flights for just cargo since the 19th of March. On September 30th the national

compensation aid for airlines expires, which will most likely result in the layoff of 16000 more

employees. United has requested an extension of the aid, but it has not been approved yet. A state

published by the IATA (International Air Transportation Association) in July suggested, that global

air travel won’t recover till 2024.

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· Manfredi, L. (2020, September 20). United Airlines, unions call for 6-month extension of
federal aid, restart of stimulus negotiations. Retrieved September 26, 2020, from
https://www.foxbusiness.com/economy/united-airlines-unions-call-for-six-month-extension-
of-federal-aid-restart-of-stimulus-negotiations
· Singh, B., Singh, S., Sumit Singh Deputy Editor - Sumit comes to Simple Flying with more
tSingh, B., Singh, S., Sumit Singh Deputy Editor - Sumit comes to Simple Flying with more
than eight years experience as a professional journalist. Having written for The Independent,
& Articles:, R. (2020, September 12). United Sued Over Discrimination Of Staffing On
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sports-charter-lawsuit/
· Contributor Zacks Equity Research Zacks. (n.d.). United Airlines (UAL) Stock Sinks As
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· United Airlines Will Remain Half Its Size Until Vaccine Is Widely Distributed: CEO.
(2020, September 22). (n.d.) Retrieved September 26, 2020, from
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· UA, R. (2020, September 18). United Airlines absolviert 5.000 reine Cargo-Flüge. Retrieved
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· Lesliejosephs. (2020, September 09). United Airlines bets on Africa, India and Hawaii in
2021 expansion. Retrieved September 27, 2020, from
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expansion.html
· Egan, M. (2020, September 01). The airline industry could shrink by half to survive, United
Airlines chairman says. Retrieved September 27, 2020, from
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· Egan, M. (2020, September 01). The airline industry could shrink by half to survive, United
Airlines chairman says. Retrieved September 27, 2020, from
https://www.cnn.com/2020/09/01/business/airline-jobs-united-munoz/index.html
·