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United Airlines

United Airlines, Inc. (commonly referred to simply as "United") is an American major airline headquartered in Chicago, Illinois. In the late 1920s, just prior to the use of the United Airlines name, The Boeing Company, currently one of the world's largest aircraft manufacturers operated a predecessor airline. The United Airlines name dates back to 1931 but control of the current corporate entity can be traced to Continental Airlines (which opted to use the United name for the combined entity), itself acquired by the smaller Texas International (which also opted to use the larger airlines name).

United operates out of nine airline hubs in the continental United States, Guam, and Japan. George Bush Intercontinental Airport in Houston is United's largest passenger carrying hub handling 16.6 million passengers annually with an average of 45,413 passengers daily, while Chicago-O'Hare is its largest hub in terms of daily departures. The company employs over 88,500 people while maintaining its headquarters in Chicago's Willis Tower (formerly known as Sears Tower). Through the airline's parent company, United Continental Holdings, it is publicly traded under NYSE: UAL with a market capitalization of over $18 billion as of September, 2014.

United's main competitors in its domestic market are Delta Air Lines and American Airlines. United is using Continental's air operator's certificate and it surrendered its original certificate when the merger closed.

As of November 2013 United Express Airlines received $31,660,211 in annual Federal subsidies for Essential Air Services that they provided through Silver Airways and SkyWest Airlines to rural airports in the U.S.

History

The current corporate entity can be traced to Aviation Enterprises, founded in 1944, which later was called Texas International. Texas International eventually acquired Continental Airlines and opted for the Continental name. Continental Airlines later gained control of United Airlines in 2010 and the combined airline currently uses the United Airlines name.

The original use of the United Airlines name originated from the Varney Air Lines air mail service of Walter Varney, who also founded Varney Speed Lines, from which Continental Airlines had originated. Founded in Boise, Idaho in 1926, the carrier flew the first Contract Air Mail flight in the U.S. on April 6, 1926, marking the first scheduled airline service in the country's history. In 1927, airplane pioneer William Boeing founded his own airline, Boeing Air Transport to operate the San Francisco to Chicago air mail route, and began buying other airmail carriers including Varney Airlines. In 1929, Boeing merged his company with Pratt & Whitney to form the United Aircraft and Transport Corporation (UATC).

In 1933, United began operating the Boeing 247, the first all-metal airliner. It was able to fly a transcontinental flight in 20 hours, making it significantly faster than its predecessors. After passage of the Air Mail Act in 1934, UATC separated into United Aircraft (the future United Technologies), the Boeing Airplane Company and United Air Lines.

After World War II, United gained from a boom in customer demand for air travel, with its revenue per passenger-miles jumping five-fold in the 1950s, and continued growth occurring through the next two decades.

In 1954 United Airlines became the first airline to purchase modern flight simulators which had visual, sound and motion cues for training pilots. Purchased for US$3 million (1954) from Curtiss-Wright, these were the first of today's modern flight simulators for training of commercial passenger aircraft pilots.

United merged with Capital Airlines in 1961 and regained its position as the United States' largest airline. In 1968, the company reorganized, creating UAL Corporation, with United Airlines as a wholly owned subsidiary. In 1970, the UAL Corporation acquired Western International Hotels, and its name was later changed to Westin Hotel Company. The 1970s also saw economic turmoil, resulting in "stagflation" and labor unrest. The 1978 Airline Deregulation Act, resulting in industry shakeups, further added to the carrier's difficulties in a loss-making period.

In 1982, United became the first carrier to operate the Boeing 767, taking its first delivery of 767-200s on August 19. In May 1985, the airline underwent a 29-day pilot strike over management's proposed "B-scale" pilot pay rates. Then-company CEO Richard Ferris changed United's parent company's name from UAL Corporation to Allegis in February 1987, but following his termination, the company reverted to the name UAL Corp. in May 1988, and divested non-airline properties.

In 1985, United expanded dramatically by purchasing Pan Am's entire Pacific Division, giving it a prime Asian hub at Tokyo's Narita International Airport, and in 1991 purchased routes to London Heathrow Airport from ailing Pan Am, making it one of two US carriers permitted exclusive access to Heathrow under Bermuda II until "open skies" took effect in 2008 (American Airlines being the other, after it purchased TWA's Heathrow landing slots). The aftermath of the Gulf War and increased competition from low-cost carriers led to losses in 1991 and 1992. In 1994, United's pilots, machinists, bag handlers and non-contract employees agreed to an Employee Stock Ownership Plan (ESOP), acquiring 55% of company stock in exchange for 15–25% salary concessions, making the carrier the largest employee-owned corporation in the world. The carrier also launched a low-cost subsidiary in 1994, Shuttle by United a high frequency, west coast-based operation, in an attempt to compete with low-cost carriers; the subsidiary remained in operation until 2001.

In 1995, United became the first airline to introduce the Boeing 777 in commercial service. In 1997, United co-founded the Star Alliance airline partnership. In May 2000, United announced a planned US$11.6 billion acquisition of US Airways, but withdrew the offer in July 2001 before the United States Department of Justice barred the merger on antitrust grounds. May 2000 also saw a bitter contract dispute between United and its pilots' union over pay cuts and concessions to fund the ESOP and overtime work, causing summer flight cancellations until a salary increase was agreed upon.

During the September 11, 2001 attacks, two of the four airplanes hijacked and crashed by al-Qaeda members were United Airlines aircraft (United Airlines Flight 175 was flown into the south World Trade Center tower; United Airlines Flight 93 was crashed in a field in Pennsylvania after the passengers fought back against the hijackers). An airline industry downturn resulted, and coupled with economic difficulties, skyrocketing oil prices, and higher labor costs, the company lost US$2.14 billion in 2001. In the same year United applied for a US$1.5 billion loan guarantee from the federal Air Transportation Stabilization Board established in the wake of the September 11 attacks. After attempts to secure additional capital failed, UAL Corporation filed for Chapter 11 bankruptcy protection in December 2002 and the ESOP was terminated.

United's bankruptcy operations resulted in furloughing thousands of workers, closing all U.S. city ticket offices, cancelling several existing and planned routes, downsizing its Miami operations, closing maintenance bases, and fleet reductions. The carrier also negotiated cost cuts with employees, suppliers, and contractors, and terminated feeder contracts with United Express carriers Atlantic Coast Airlines and Air Wisconsin. The carrier launched a new, all coach, low-cost carrier named Ted in 2003, and a luxury "p.s." (for "premium service") coast-to-coast service on re-configured 757s in 2004. In 2005, United cancelled its pension plan in the largest such default in U.S. corporate history.

In 2005, United announced it had raised US$3 billion in financing to exit bankruptcy and filed its Plan of Reorganization, as announced, on September 7, 2005. In late 2006, Continental Airlines participated in preliminary merger discussions with United. On June 4, 2008, United announced it would close its Ted unit and reconfigure the subsidiary's aircraft for a return to mainline configuration.

On April 16, 2010, United resumed merger talks with Continental Airlines. (The two airlines had previously discussed merging in 2008.) The board of directors of both Continental and UAL Corporation's United Airlines reached an agreement to combine operations on May 2, 2010. The combined carrier would retain the United Airlines name, but use Continental's logo and livery, and Continental's CEO Jeff Smisek would head the new company. The merger was contingent upon shareholder and regulatory approval.

The Continental–United merger was approved by the European Commission in July 2010 and by the US Justice Department on August 27, 2010. On September 17, 2010, United's shareholders approved the merger deal with Continental Airlines. Both carriers planned to begin merging operations in 2011 to form the world's biggest carrier. On October 1, 2010, UAL Corporation completed its merger with Continental Airlines and changed its name to United Continental Holdings, Inc. The airline received a single operating certificate from the FAA on November 30, 2011. On March 3, 2012, Continental and United merged their passenger service systems, frequent-flier programs, and websites which officially eliminated the Continental name and brand as far as the public was concerned.

Predecessors

United Airlines is a combination of a number of air carriers that merged with each other starting in the 1930s with the most recent merger concerning Continental Airlines (which had previously merged with or acquired several airlines during its history) thus reflecting changes in focus of both United and the U.S. air transport market.

Predecessor air carriers that form the present United Airlines include:

  • Boeing Air Transport (formed in 1927, merged into United Airlines in 1931).
  • Capital Airlines (formed in 1936, merged into United Airlines in 1961).
  • Continental Airlines (formed in 1934, merged into United Airlines in 2010).
  • Air Micronesia (formed in 1968 as a division of Continental Airlines, later became Continental Micronesia and merged into Continental Airlines in 2010..
  • New York Air (formed in 1980, merged into Continental Airlines in 1987).
  • Pioneer Airlines (formed in 1939, merged into Continental Airlines in 1955).
  • People Express Airlines (PEOPLExpress) (formed in 1981, merged into Continental Airlines in 1987).
  • Frontier Airlines (formed in 1950, merged into People Express Airlines in 1986).
  • Arizona Airways (formed in 1942, merged into Frontier Airlines in 1950).
  • Central Airlines (formed in 1949, merged into Frontier Airlines in 1967).
  • Challenger Airlines (formed in 1941, merged into Frontier Airlines in 1950).
  • Monarch Airlines (formed in 1946, merged into Frontier Airlines in 1950).
  • Texas International Airlines (formed in 1944 as Trans-Texas Airways (TTa), Continental Airlines merged into Texas Air in 1982, with Texas Air changing its name to Continental).
  • National Air Transport (formed in 1925, merged into United Airlines in 1931).
  • Pacific Air Transport (formed in 1926, merged into United Airlines in 1931).
  • Pan American World Airways (Pan Am) (Formed in 1927, Pacific Division acquired by and merged into United in 1985, London Heathrow international traffic rights acquired by and merged into United in 1990. Pan Am was later forced to declare bankruptcy in 1991).
  • Varney Air Lines (formed in 1926, merged into United Airlines in 1931).

Many of these acquisitions and mergers were completed by Continental Airlines when this carrier was under the ownership and control of Texas Air Corporation from 1982 to 1987. During that time period, New York Air and Texas International Airlines (which were already owned by Texas Air Corporation before this company acquired Continental) were merged into Continental. Texas Air Corporation subsequently acquired PEOPLExpress Airlines (which had previously acquired Frontier Airlines) and then folded these air carriers into Continental as well. As for United, before merging with Continental it had acquired Capital Airlines in the 1960s and had also purchased Pan Am's Pacific Division as well as Pan Am's transatlantic route rights into London Heathrow Airport during the 1980s.

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