Up and away
The world's largest airline, United is also the world's largest employee-controlled corporation. Employees currently own 55 percent of the corporation, and since United's employee buyout in 1993, the company has revived profits and recorded unprecedented sales. United's recent success as an airline, however, comes after years of bitter union battles and failed forays into the hospitality business.
Split at the roots
Originally part of a conglomerate that included Boeing and Pratt and Whitney, United Airlines split from these industrial divisions in 1934. Slow to offer jet service, United nevertheless became the largest airline in the world by 1961. United bought Westin Hotel in 1970, Hertz Rent-A-Car in 1985, and Hilton International in 1987 as part of its effort to become a travel conglomerate. A shareholder revolt forced United to sell its non-airline operations in 1987. In the 1990s several failed attempts to lower costs through labor concessions led to layoffs and bitter labor disputes instead ? an impasse that led to the 1994 plan that ceded 55 percent of the company to employees in exchange for $4.8 billion in wage concession and work rule revisions.
Frequent fliers benefit
Profitable again, United is turning its attention to forming profitable partnerships with competitors. The company has signed an agreement with several international carriers to share profits and resources on several flight routes. In 1998, the airline announced a marketing alliance with the U.S.'s third-largest carrier, Delta. As the first step in this strategy, the two airlines linked their frequent-flier plans, lumping together United's 30 million members with Delta's 23 million. United and Delta also plan to begin code sharing (allowing one airline to put its two-letter ID code on the flights of another airline to coordinate schedules, thus minimizing connection time, and allowing for services such as one-stop check-in). The alliance is one of several in the airline industry -- American Airlines and U.S. Airways have announced a plan to link frequent flier plans and codes, and Northwest and Continental are also pursuing a partnership. United is also planning an alliance with American that will allow travelers to buy electronic tickets from either carrier and use them on the other. The company announced a co-branded Visa credit card with HSBC in 1999 as well, which provides United customers added benefits beyond the frequent flier program.
United Airlines, although the largest airline among its 10 major competitors, was ranked last in a 1999 survey concerning the overall performance of each of the top 10 airlines. United claims that much customer dissatisfaction stems from the company's massive size, which makes problems within the airline difficult to fix.
To improve its customer satisfaction, United invested $260 million to improve its Los Angeles airline terminals and add another ninth gate for customers whose flights have been delayed. Because most of the airline's worldwide revenue comes from West Coast passengers, United is hoping that the renovations, expected to be completed in 2000, will make flights a much more enjoyable experience for all. The company also implemented a new plan in an effort to increase the timeliness of its flights. The new policy requires that all passengers not in their seats 10 minutes before departure or five minutes before takeoff risk being left behind.
In May, 2000, United bought US Airways in a deal worth $4.3 billion in cash; thus creating a carrier with the largest share of passengers from Boston to New York to Washington. If the acquisition is approved by shareholders and government regulators - which should take place early 2001 -- United will carry almost 500,000 passengers a day, have hubs in nine American cities from Philadelphia to San Francisco and employ 145,000 people. The acquisition represents the first merger of two large American airlines since a wave of consolidation in the 1980's, and analysts said United's new strength would force other airlines to consider deals as well. The merger would call into question United's frequent-flier alliance with Delta Airlines, which United signed largely to gain access to Delta's many passengers on the East Coast.
The deal should not mean the lay off any of its new employees, and the company will profit from the deal by winning more of the coast-to-coast and overseas business of the passengers who now fly US Airways. United has long hoped to gain a better foothold in the East, the busiest region in the United States.
United now faces the difficult task of merging US Airways' fleet and its 45,000-person work force with its own while it is in the midst of increasingly contentious labor talks with its pilots' and machinists' unions. In the weeks leading up to the merger, United had to cancel some flights after some pilots declined to fly overtime during the negotiations.
United's flight services expanded in 1999 as well with the offering of a daily San Francisco-Maui round trip flight, a freighter service between New York and Asia, and more domestic flights from the Dulles International Airport in Virginia, increasing competition between United and U.S. Airways for the customer market of the small airport. James E. Goodwin, named president and CEO of the UAL corporation in July 1999 as successor to the retiring Gerald Greenwald, is overseeing United's renovation attempts.
The entrance requirements for United's employees vary, and United lists these requirements at its web site, located at www.ual.com. The company's employment pages describe entry-level positions and indicate which are most frequently available. The site also provides the addresses that applicants must use to request an application, which vary with each position. This same information is available on United's job hotline.
The selection process, described at the site, includes a simulator evaluation and/or a panel interview with a flight operations representative and an employment representative, as well as a medical checkup. Flight attendant candidates undergo one interview at major cities in which United recruits, and then another interview round at the company's Chicago headquarters.
When it comes to corporate jobs, United is MBA-happy. "It may take a while to get established with only an undergrad degree," says one insider. On the other hand, "MBAs can do quite well." United hires MBAs for finance, marketing, and operations functions; most business school hires have two to three years of work experience. New recruits about a dozen a year are brought into the company's Finance Planning & Analysis division. The MBAs spend one year serving as internal consultants to senior management, before moving to another division. In the first year, each MBA is assigned to a team that focuses on one particular aspect of United's operations: performance analysis, operating budgest, capital planning, or financial analysis. MBAs progress from staff analyst to senior staff analyst to manager and then director.
United Airlines' employees boast of their "soaring morale" now that they are part owners of the friendly skies. "We're the largest employee-owned company in the world. Since our employee stock option plan several years ago, we have definitely become more people and customer oriented," reports one contact. "Years ago we were very conservative with a traditional corporate environment, but that has all pretty much changed. No more stuffy suits and ties." Says another insider: "The culture is excellent, with a lot of team decisions and a relaxed, dress-down atmosphere."
Good perks and diversity
United employees enjoy the "generous flight allowances" that enable them to "make each vacation count." The travel benefits may not be such a hot deal, since "pay is considered to be at a discount because the travel benefits are valued highly by many ? one could expect to make from 10 percent to 25 percent less than at a company with standard benefits." On the bright side, as befits a company that literally works all over the world, employees term the workforce "multinational and multicultural." Says one minority insider: "The company is really great in promoting equality in opportunities and goes to great lengths to make sure that things are fair and above board."
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