United Airlines Analysis Case Solution
United Airlines holdings run its operations through United Airline Subsidiary. Company is known for its passenger and cargo airline. United Airlines on daily basis deals with 4099 flights towards 360 airports. It has five destinations hubs from the continents i.e. US hubs in Newark, Chicago, Denver, Houston, Los Angeles, San Francisco, Washington, DC, and the US island of Guam. Start alliance is the marketing sharing group of united airlines. Company collects its revenues from three different streams. Cargo revenue, passenger revenue and other operations revenue. The major portion of revenue was generated through passenger’s revenue that was 90% and further the two others were equally participants. Financial health of united airlines was good by year 2019. Company’s sales grows 5% as compare to the previous year with revenue of $43.3 billion. The net income of the company was $3 billion in 2019 it was also more than 2018. Cash also increased in 2019.
Section-2 Problem Statements
In the end of 2019 the outbreak of covid-19 changed the story and affected the industries badly. After pandemic the countries imposed lock-down completely and the airlines industry also faced the consequences. The company faced expected third-quarter loss nearly $2 billion. Due to the demands decreased by 94% in the industry. The overall revenue of the company decreased by 78%. And the passenger’s revenue decreased by 84%. But the cargo somehow covered the losses and showed the 50% increase in cargo. Company had to lay off the 13000 employees as the payroll support was about to expire. Company stated that if white house and congress provided aids, then they will rehire these employees. Kirby says the corona virus pandemic has created “the worst financial crisis in aviation history,”.
Section -3 Critical thinking
After going through the whole analysis of Aviation industry and united airlines, we had gathered few points of considerations. The situation is still not that much good to resume the flights. The ban over travel still continues for Europe and Brazil. So the demand of travel is still not up to mark. United airlines was receiving the aids for payroll and the terminated employees were called back but for temporary basis. To prevent company from further loss company needed to cut its operating cost. Company was trying to approach the vaccination as soon as possible so that it can resume the operations. Due to pandemic the cancellation rate of bookings were high so company was unable to predict revenues on the basis of bookings. As the situations after vaccine is getting better and it is expected to recover the losses by year 2022.
After vaccination united started to facilitate their customers through travel-ready centers which facilitate them to make travel bit easy and safe. But for united airlines it is necessary to recover the losses. In year 2020 united airlines recovered at minor level. But the other chargo stream increased by 50%.
The united airlines is facing these issues and need strong strategies to recover the losses. Company did not recovered its revenues till date as the adjusted net loss was $2.1 billion in the fourth quarter ended December 31. Company had 3 revenue streams and it was now turn for company to reduce the cost and improve other revenue streams. And try to arrange the flights for those who are willing to travel……………………………
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