Introduction to United Continental Holdings, Inc - Research Paper Example

?Introduction United Continental Holdings, Inc. (as well as its consoli d subsidiaries) is a holding company and its principal, 100%-owned subsidiaries are United Air Lines, Inc. (“United”) and Continental Airlines, Inc. (“Continental”) (United Continental Airlines, 2011, p.3). United Continental Holdings, Inc. is listed on the New York Stock Exchange using the ticker symbol UAL and started trading on Oct. 1, 2010. The Company moves people and cargo through its major operations, which use jet aircraft with at least 110 seats, and its regional operations (United Continental Airlines, 2011, p.4). UAL has the world’s widest global route, because it can travel in the U.S., Asia?Pacific, Europe, Middle East, Africa, and Latin America (UAL, 2011, p.4). UAL has 5,600 flights a day to “more than 370 U.S. domestic and international destinations” from the Company’s usual routes at “Newark Liberty International Airport, Chicago O’Hare International Airport, Denver International Airport, George Bush Intercontinental Airport, Hopkins International Airport, Los Angeles International Airport, A.B. Won Pat International Airport, San Francisco International Airport, and Washington Dulles International Airport” (UAL, 2011, p.4). When regional operations are added, United has around 3,200 flights a day to more than 235 domestic and international places since January 1, 2012 (UAL, 2011, p.4). UAL’s present strategy is “unbundling” existing products and services, enhancing value?added products, and providing customers with greater flexibility and choice in choosing the products and services they are ready to buy (UAL, 2011, p.38). The company also aims to invest in technology that helps assist customers with efficient self-service tools and enables the company to make high-quality operational decisions, while decreasing operating costs (UAL, 2011, p.38). UAL posted a net income of $840 million in 2011, which is 232% higher in 2012 (UAL, 2011, p.32). Vision, Mission, Goals and Objectives The vision of United Continental Holdings is to be the leading airline of choice for customers and to be the leading airline workplace for employees (UAL, 2011, p.4). It mission is to deliver significant profitability and sustainable long-term value for its customers, the communities it serves, its shareholders, and employees all over the world (UAL, 2011, p.4). One of UAL’s existing goals is to earn “$1.0 billion to $1.2 billion in net annual synergies on a run?rate basis in 2013, including between $800 million and $900 million of annual revenue synergies from its merger” (UAL, 2011, p.4). In order to attain this goal, its objectives are to expand customer options, to attain greater scope and scale, to optimize fleet operations, and to expand services (UAL, 2011, p.4). UAL also wants to control fuel prices through hedging future fuel requirements (UAL, 2011, p.14). Nonetheless, the Company’s hedging programs may employ noteworthy amounts of cash, because of the posting of cash collateral in several instances, so it might not be effective in controlling fuel costs and may be restricted due to market conditions and other reasons (UAL, 2011, p.14). Moreover, considerable reductions in fuel prices may augment the costs related with the Company’s fuel hedging arrangements to the degree that it uses swaps or collars (UAL, 2011, p.14). Swaps and sold-put alternatives (which belongs to a collar) may obligate the company to pay to the counterparty upon decision on the contracts, if the cost of the commodity hedged goes below the agreed upon quantity (UAL, 2011, p.14). Falling crude and other prices may result to significant amounts of collateral to pay for these swaps (UAL, 2011, p.14). Furthermore, UAL aims to reduce operational costs by promoting website use for customers and enhancing the capabilities of the company website (UAL, 2011, p.7). It seeks to improve availability of new services and ease of access at its website (UAL, 2011, p.7). Moreover, UAL is pursuing different actions to decrease its carbon emissions through “fleet renewal, aircraft retrofits, and actions that are establishing the foundation for the commercialization of aviation biofuels” (UAL, 2011, p.11). The Company also does “voluntary environmental assessment and remediation actions” (UAL, 2011, p.11). It prepares for environmental cleanup obligations that can come from using aircraft fueling facilities and airport sites (UAL, 2011, p.11). Future costs connected with these activities are presently not anticipated to have a material unpleasant impact on the Company’s business (UAL, 2011, p.11). UAL also wants to improve worker relations through following collective bargaining agreements and continuously meeting with unions to meet collective goals and interests (UAL, 2011, p.7). Collective bargaining agreements between the Company and its represented employee groups are discussed under the Railway Labor Act (“RLA”), which manages labor relations in the air transportation industry (UAL, 2011, p.12). These agreements normally do not hold an expiration date and instead identify an amendable date, upon which the contract is seen as “open for amendment” (UAL, 2011, p.12). The process for combining the represented employee groups of United and Continental is managed by a combination of the RLA, the McCaskill?Bond Amendment, and where appropriate, the present conditions of United’s and Continental’s collective bargaining agreements and union rules (UAL, 2011, p.12). Through the RLA, the National Mediation Board (“NMB”) has restricted authority to solve union representation disputes that come from airline mergers (UAL, 2011, p.12). Using the McCaskill?Bond Amendment, “fair and equitable” incorporation of seniority lists is necessary, including arbitration, where the involved parties cannot arrive at a consensual agreement, as provided in the “Allegheny?Mohawk Labor Protective Provisions or internal union Merger policies,” if appropriate (UAL, 2011, p.12). While waiting for operational integration, the Company will implement the terms of the present collective bargaining agreements unless other terms have been discussed (UAL, 2011, p.12). One of UAL’s goals is to increase its loyal and new customers through its “United’s Mileage Plus and Continental’s OnePass (“OnePass”) programs” (UAL, 2011, p.7). It seeks to boost customer loyalty by providing awards and services to program participants (UAL, 2011, p.7). Members in these programs receive mileage credit for flights on “United, United Express, Continental, Continental Express, Continental Connection, airlines in Star Alliance and certain other airlines that participate in the program” (UAL, 2011, p.7). Customers can also earn miles by buying goods and services from its network of non?airline partners, such as credit card issuers, retail stores, and hotels and car rental firms (UAL, 2011, p.7). Mileage credits can be cashed in for free, or used for discounted or upgraded travel and non?travel rewards (UAL, 2011, p.7). In 2011, the Company proclaimed that MileagePlus will be the loyalty program for the Company starting in 2012. OnePass is anticipated to end in the first quarter 2012, at which point United will enroll OnePass members in MileagePlus and transfer them to MileagePlus accounts award miles equivalent to their OnePass award miles balance (UAL, 2011, p.7). The Company’s loyalty program provides “The Consolidated Amended and Restated Co?Branded Card Marketing Services Agreement dated June 9, 2011” (UAL, 2011, p.7). These agreements state that loyalty program members can accumulate frequent flyer miles for making purchases using co?branded credit cards issued by Chase (UAL, 2011, p.7). Reference United Continental Airlines. (2011). 10 K Report. Retrieved from http://ir.unitedcontinentalholdings.com/phoenix.zhtml?c=83680&p=irol-IRHome Read More