Introduction

October 1st, 2010 was an important date in the history of airline

business industry as two of the World’s best airlines, United Airlines

and Continental Airlines to form the new United Continental

Airlines in order to deliver consequential prosperity and

profitability while maintaining a sustainable long-term significance

to their esteemed stakeholders across the globe.

United Continental Holdings, Inc. is the investment company for

Untied Airlines and Continental Airlines served by more than

86,852 employees and operating the second-largest fleet with 702

aircraft having the headquarter sin Chicago, while its core

operations are from Houston in the United States of America.

United is a beginning member of the Star Alliance, the major airline

alliance in the world, and proposes connections to over 1,000

destinations in over 170 countries worldwide (United Airlines,

2012).

United was the first airline to begin Boeing's new 777 airliner, with

a flight from Washington, D.C. to London on June 7, 1995. It has

also played vital roles in the international market. In 1997, , it

combined with Air Canada, Germany's Lufthansa, the Scandinavian

Aircraft System (SAS), and Thai International (later connected by

Varig of Brazil) to create the Star Alliance to offer a common

network of world-spanning routes. United placed a number of years

of profits in the late 1990s but, because of an economic downturn in

Asia, the airline's increase in profits has decreased. At the end of

the century, United sustained to be one of the most significant

players in domestic commercial aviation (Siddiqi, n.d).

Presently, Jeff Smisek is President and Chief Executive Officer of

United Continental Holdings, Inc., the holding company for both

United Airlines and Continental Airlines. Mutually with their

provincial partners, these both airlines functions a total of

approximately 5,675 flights a day to 372 airports on six continents.

Smisek is also a member of the United Continental Holdings, Inc.

Board of Directors. He became President and Chief Operating

Officer in September 2008 and take for granted the role of

Chairman, President and Chief Executive Officer in January 2010.

He was also selected as Aviation Week’s Person of the Year for

2010("Biography," 2010).

Company Background

Continental Airlines Company was incorporated in the early 80’s of

the 20th century and presently one of the most important airlines

operated in US along with a business range of transporting

passengers, cargo and mail handling operations. On October 1,

2010, UAL Corporation concluded it’s getting hold of of Continental

Airlines and changed its name to United Continental Holdings, Inc.

The airline acknowledged a single operating certificate from the

FAA on November 30, 2011 (FREED, 2011). On March 3, 2012,

Continental and United compound their passenger service systems,

frequent-flier programs, and websites which officially removed the

Continental name and brand as far as the public was concerned

(Riegler, 2012).

Mission and Vision Statement

Vision:

“To be recognized as the best airline in the industry by our

customers, employees and shareholders”

Be carefully analyzing Continental Airlines vision statement,

customers can obviously interpret that they hope on happening the

best in what they do. Continental Airlines aim to achieve the final

level of pleasure from not just its customers, but also from its

employees and shareholders. Its vision statement gives significance

on both its interior and exterior customers cautiously stress their

significance to their successes. Continental has discovered the

reality that many companies be likely to overlook, that is, so as to

be successful in the airline industry they will have make sure the

satisfaction of its employees, who in order will convey quality

services to their customers that will make them to come back for

these services time and again.

Mission:

Although Continental Airlines makes an clear name in the airline

industry, it does not have a predefined mission statement. It has

established a vision, as stated above, and it has a variety of

strategies that it sticks by that make it possible for it to work

towards this vision. However, from a cautious study done on its

overall business operations and its guiding principles and values,

we can assume that Continental Airlines mission is to be the kind of

airline customers want to fly on, and the airline people want to

work for. This also undoubtedly portrayed in their vision, and hence

is a ideal fit as Continental Airlines Mission Statement.

The “Go Forward Plan” Continental’s basic element for success.

This ever changing, four point plans allows the company to prepare

and exceed its goals. Since it’s development in 1995, this has led

the company to much greater heights of distinction in terms of

service and finance.

The “Fly to Win” factor highlights the requirements to reach top

quartile industry margins. This means that they hope to enlarge

their international airline connectivity and go on eliminating non

value added costs.

The “Fund the Future” aspect focuses on developing continental’s

franchises and set the stage for future growth. In addition, it

focuses on their fleet map and drone real state and make sure the

well-built cash flow and financial flexibility.

The “Make Reliability a Reality” element puts forth the principles of

making an industry leader of a product that Continental is arrogant

to present. In addition, they aim on becoming at the top in terms of

on time arrivals, baggage handling, complaints and involuntary

denied boarding’s. They also hope to get better their product every

chance they get, and in turn improving their overall company

reflection.

Finally their “Working Together” element states that they want to

promote a culture where people enjoy coming in for work every day

and are acknowledged for their contributions in the company’s

triumph. In doing so, they want to place an importance on safety,

employee programs and communication.

Following are the Major recognized external opportunities and

threats of Continental Airlines. Identifying these factors help the

company to assess its current position in the competitive market

and encourage the management to analyze the current market in

order to set the strategies and goals also these are they points to

evaluate the industry analysis the external factors evaluation.

Environmental effects

Political-Social-Economic

Political

No Factors Case Issue Finding

1Labor cost. Continental Airline’s labor costs may not be

competitive.Opportunity

2Chapter 11 –

bankrupt protection

Chapter 11 bankruptcy allows airliners to achieve substantial cost reductions through, among other things, reduction or discharge of debt, lease and pension obligations and wage and benefit reductions

Opportunity

3New EU US open skies

treaty

EU-US Open Skies policy would present opportunities to airliners to expand their service horizon.

Opportunity

Social

No Factors Case Issue Finding

1Discouragement to air fly

Terrorist attacks have increased risk and Public health threats are affecting travel behavior. Threat

2Terrorist Attacks

September 11 affected the sales of airliners Threat

3Economic slow down

Global environmental issues are influencing the way airliners conduct their business and operation.

Threat

4More demanding

Nowadays, customers are more demanding in terms of quality service expectations and the advance of ICT has also given customers more buying power and selections

Opportunity

Economical-

No Factors Case Issue Finding

1Competitive force

New Low Cost Airliners present new competitions to Continental Airlines

Threat

2Terrorist Attacks

Additional terrorist attacks or international hostilities may further adversely affect Continental Airline’s financial condition

Threat

3Economic slow down

An economic downturn could result in less demand for air travel.

Threat

4Competitive forces

Low cost carrierOpportunity

5Loss of profit Highly competitive and less attractive domestic

market Threat

The Effect of Economic Crisis

The confusion of the Recession led companies to restrict travel and

forced leisure travelers to tighten their budgets, leaving little

discretionary spending. Volatile fuel prices had a eternal impact on

the airline industry also. Although many experts believe that the

recession is over, there have been concerns regarding double dip

recession. Economic problems in the rest of the world and recent

dismal data regarding jobs, housing and consumer spending have

raised the concerns for another recession.

United has just come out from the bankruptcy. United may not

withstand another recession, yet alone the merger with

Continental. Therefore, united must carefully craft an alternative

strategy to coup with another recession.

S-W-O-T Analysis

Strength

1. The fact that the airline provides customized services in accordance to

the destination it’s travelling to.

2. The company rose to profitability after being hit severe losses for four

years straight.

.

Strength

1. The fact that the airline provides customized services in accordance to

the destination it’s travelling to.

2. The company rose to profitability after being hit severe losses for four

years straight.

Weakness

1. The fact that its ‘Go Forward’ plan does not attend the environmental

issues directly.

2. The airline has faced a decrement in its overall AQR scores.

3. Service quality has also faced a decline.

4. It has been recorded that continental has poor on-time performance,

despites its efforts.

5. Lack of internal training for the employees

Opportunities

1. Continental airlines should consider researching the international make,

as they face intense competition from the local market.

2. The installation of winglets in an attempt to lessen costs.

3. The “EU-US Open Skies’ provides Continental with an opportunity to

broaden its base in terms of connectivity.

4. Growing demand for travel at 3.2% growth in 2011

5. 42% increase in the Hispanic population in US over the last decade.

Main competitors

Southwest Airlines (NYSE): The number one domestic airline

provider with low cost fair flights throughout U.S. The airline was

established in 1967adopting its current name in 1971 and as of

June 5, 2011 is the largest airline in the United States based upon

domestic passengers carried. In May 2011 the airline get hold of

Orlando-based AirTran Airways, with full combination of the

carriers taking place over several years, and on March 1, 2012, the

company was issued a single operating certificate meaning that

from a technical standpoint, Southwest and AirTran became one

airline.

Threats

1. Rise in the fuel costs and domestic competition

2. Elevation is security costs due to the risk of security due to terrorism.

3. The fact that its rival have recovered from bankruptcy and recovered

back much stronger due to their ability to reduce their costs.

4. The introduction of new aircrafts by the rivals and the fact that this

would directly contradict Continentals young and more fuel efficient

aircrafts

5. Entry of international airlines into the domestic services

6. Ongoing pricing competition of budgeted airlines in the market.

7. Airline industry as a whole vulnerable to economic cycles and big swings

in bottom-line performance.

American Airlines (AAL/AA): The fifth largest airline in the world

based on available seat miles and revenue passenger miles on an

average day. AMR is the parent company of American Airlines and

headquarter in Fort Worth, Texas. American was the last of the

remaining legacy airlines in the US to file for bankruptcy, and thus

there are no remaining legacy carriers that have not taken

advantage of Chapter 11.

Delta Airlines (DAL/DL): Delta Airlines is the major airline in the

U.S, headquarters in Atlanta, Georgia. It is the world's largest

airline according to fleet size, and the world's largest airline in

relation to the scheduled passenger traffic. Delta and its

subsidiaries, with approximately 80,000 employees, operate over

4,000 flights every day. Delta is a beginning member of the

SkyTeam coalition and has the allegiance program SkyMiles.

The main financial statement and ratios

Delta Southwest American US Airways Jetblue02468

1012141618

Market Share

Social Responsibility

�As an intern national Airlines, United Airlines’ Corporate

Social Responsibility report - Every Action Counts(SM) -

stress their actions and obligations to business ethics and

leadership, safety, customer pleasure, employee development

and opportunity, community engagement, and environmental

responsibilities.

Every Action Counts(SM) point out the attention to United's

improvement toward making a significant changes in the cities

and communities where its people live, work, travel, and do

business. It demonstrates the company's hard work to attain

industry leadership in safety and customer satisfaction; its

ongoing support to their communities to deal with important

economic and social needs; and the development in executing

accountable environmental proposals that decrease impact in

the air and on the ground.

Recommendations

The overall strategic analysis of Continental Airlines reveals that

current recommendation for the horizontal integration strategy

which in merging in this case would boost the sales over the years

and the company can have a significant control over the entire air

transport operations in the domestic airline market of United States

as well as in the international airline operation as well. The

expected growth of company will definitely become a threat for

many of the domestic air carriers in the United States and it will

increase the overall market share of the company in the coming

years.

Reference

United Airlines. (2012, April 21). In Wikipedia, The Free Encyclopedia. Retrieved 17:45, April

23, 2012, from http://en.wikipedia.org/w/index.php?

title=United_Airlines&oldid=488485681

Siddiqi, A. (n.d.). United airlines. Retrieved from

http://www.centennialofflight.gov/essay/Commercial_Aviation/UnitedAirlines/Tran16.htm

Biography. (2010). Retrieved from http://ir.unitedcontinentalholdings.com/phoenix.zhtml?

c=83680&p=irol-govBio&ID=204741

FREED, J. (2011, November 29). Pilots: United gets single operating certificate. Retrieved

from http://news.yahoo.com/pilots-united-gets-single-operating-certificate-

231520061.html

Riegler, P. (2012, March 04). United and continental complete computer system and web site

merger. Retrieved from http://www.frequentbusinesstraveler.com/2012/03/united-and-

continental-complete-computer-system-and-web-site-merger/