United Airlines

Essay by aashi October 2006

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Executive Summary

United Airlines declared bankruptcy in December 2002 and has been struggling since late 2000 with costs exceeding revenue. The company has undergone massive changes, and significant improvements in performance and cost containment but business remains difficult. Low cost airlines like JetBlue and Southwest have been gaining market share with their lower cost point-to-point networks leaving the hub-and-spoke providers at a disadvantage. The Internet has brought about unprecedented price transparency which has also operated against the United model of yield-management. Finally, the company's financial condition prohibits it from hedging rising fuel cost.

United has fought back with cost cutting measures. Unions have made concessions, on-time performance has, ironically improved, and the company has started their own low-cost model in Ted. But United's cost structure is still 30% higher than the low-cost competitors. There is little comfort in the knowledge that American and US Air are also suffering losses. United is changing its strategy to survive since it can no longer completely depend on their historical lifeblood - the business traveler.

Deploying an IT alignment strategy is more important than ever to help cut costs, leverage their strengths, and add value to the travel experience. The rest of this paper explores the past, current, and recommended future IT strategy and applies the alignment model to assess those strategies.

United Airlines: Company Description, Goals and Objectives

Company Description:

United Airlines is the main subsidiary of UAL Corp. For decades, United had been the world's largest airline, but has fallen to the No. 2 position, behind American Airlines. Though smaller in scope, the airline flies about 500 jets to more than 110 destinations in the US and 27 other countries from hubs in Chicago, Denver, Los Angeles, San Francisco, and Washington, DC. It leads the Star Alliance, a global marketing partnership...