Marketing Mistakes: Continental Airlines - Case Study Example

s Marketing 7th March Continental Airlines Frank Lorenzo was a sort of evil genius behind the establishment of Continental as a leading airline in the United States. Lorenzo bought controlling stake in Continental in 1982 when it was on the verge of collapse and then restructured its debt, and later filed for chapter 11 bankruptcies (Hartley 162). This made it possible for him to get rid of union employees, many of whom walked out, while relieving the company from its interest obligations. However, his leadership style led to a very bad reputation for Continental because of very low levels of staff motivation, and his poor fiscal policies.

Gordon Bethune took over as the President and Chief Operating Officer of Continental in 1994 after nine months in the company (Hartley 163). Previously he had been vice president at Boeing and the general manager in charge of customer service. When Bethune took over at continental, it had two major problems. The first problem was employee motivation. Years of low pay, union politics and the hard-line leadership of Lorenzo left them very demoralized (Gilson 248). The second problem was the company’s financial standing, and by extension the business continuity of the company.

Continental had an aging fleet, massive debt and an inefficient business model that did not optimize its profit potential. The major changes Bethune instituted included building of employee morale by instituting an open door policy which included regular communication with the company’s staff, and use of performance pay incentives. He also worked to secure financing to replace the airlines aging fleet. Finally he oversaw the redesign of the airlines routes to maximize efficiency. Continental rose from its ashes to become one of the best airlines in America.

It received several awards such being one of the top 100 companies to work for, and winning best customer service awards. Its CEO, Bethune, made it as one of the top 25 CEOs of the year for the Economist Magazine in 1996 (Hartley 170). Continental remains one of the most stable airlines in the post September 11 period in America today. The fortunes of airlines are a mixed lot after September 11. Some have filed for bankruptcy and continue to operate, others filed and ceased operations, while others merged to become more viable players n the airline industry.

The latest airline to file for bankruptcy is the American Airlines, but it is still carrying on with operations as it restructures. Frank Lorenzo founded a capital firm, Savoy capital that deals with investment related business. The company has interest in the venture capital niche and also provides investment advice to people who need it. Lorenzo’s attempt to re-enter the airline industry through ATX, Inc in 1994 did not get regulatory approval. Lorenzo serves on number of boards of charitable organizations in various States in America.

Gordon Bethune went on to serve as the chairman of Aloha Airlines, Inc, and Aloha Airgroup. The airline wound up passenger services and retained cargo services only and later on wound up all together. Currently, Bethune is in charge of GB-1 Partners, where he is the Managing Director. He is also a member of several Boards in companies across several States. Works CitedGilson, Stuart. Creating Value Through Corporate Restructuring: Case Studies in Bankruptcies, Buyouts, and Breakups . New York, NY: John Wiley and Sons, 2010.

Hartley, Robert F. Continental Airlines: Salvaging from the Ashes. Michigan: Wiley, 2007.