1. United Airlines Case Analysis BSAD 449 – Professor Muss May 9, 2006 by Renee Graham, Tamar Ferguson, Hope Halberg Jessica Powers, and Laura Rickard

2. Home Previous Next Help Summary Overview Introduction Industry Analysis Company Analysis Competition Problems Recommendations Conclusion

3. Home Previous Next Help General Environment and Trends Demographic Economic Political/Legal Sociocultural Technological Global

4. Home Previous Next Help General Environment and Trends Industry –Low-Margin –Capital-intensive Cost components –Labor –Fuel Costs Unions Price Competition

5. Home Previous Next Help General Environment and Trends Techonology- Internet Decrease of customer loyalty Global Trends -1992 Strategic alliance with Air Canada -1997 Star Alliance

6. Home Previous Next Help General Environment and Trends Sociocultural Trends- -September 11, 2001 - United Airlines Response Political/ Legal -1978 Deregulation -Air Transportation Safety and System Stabilization Act -Emergency Aid Loans

7. Home Previous Next Help General Environment and Trends Opportunities for continued success

8. Home Previous Next Help The deregulation act of 1978 Market size The point-to-point system Hub-and-spoke system Alliances Rolling hub system

9. Home Previous Next Help PORTERS

10. Home Previous Next Help SWOT BREAKDOWNJET BLUEAMRUALSWESTDELTA PRICE0.497788 22.517.5 20 GATE PERFORMANCE0.288888 40 QUALITY0.297685 4535304025 RELAIBILITY0.195684 9050608040 MARKETING0.164464 6040 6040 TOTAL1.00 298.5 213.5218.5278194

11. Home Previous Next Help SW UAL Cost to Consumers High Medium Low JetBlue Ryanair Lufthansa Japan DAL AMR High S E C U R I T Y Low CAL

12. Home Previous Next Help Tangible and Intangible Resources Value –Price Tangible Intangible Brand Loyalty Frequent Flyer

13. Home Previous Next Help Differentiation Market Share –Point-to-Point No Change Competition Strategy Delta

14. Home Previous Next Help UAL Financial Ratios United Airlines Financials Ratio19971998 ∆ '97 to '981999 ∆ '98 to '992000 ∆ '99 to '002001 ∆ '00 to '01 Gross profit margin43.5%43.9%0.4%47.3%3.4%42.4%-4.9%28.5%-13.9% Net profit margin5.5%4.7%-0.8%15.6%10.9%0.3%-10.6%-13.3%-2.7% Return on assets6.0%4.4%-1.6%13.4%9.0%0.2%-13.2%-8.5%-8.7% Return on equity38.9%20.5%-18.4%46.5%26.0%0.9%-4.5%-69.0%-23.4% Debt to assets81.3%77.9%-3.4%70.7%-7.2%76.3%5.6%87.7%11.4% Debt to equity527.1%361.0%-166.1%245.2%-115.8%322.8%77.6%710.2%387.4% LT debt to equity9.6%2.4%-7.2%1.5%-0.9%3.0%1.5%39.1%36.1% Cash ratio0.060.070.010.06-0.010.260.200.21-0.05 Quick ratio0.360.34-0.020.360.020.550.190.46-0.09 Inventory turnover1.771.780.011.900.121.74-0.161.40-0.34 Fixed asset turnover1.090.93-0.160.87-0.060.86-0.010.73-0.13 Total asset turnover1.100.95-0.150.86-0.090.79-0.070.64-0.15 Receivables turnover16.5315.43-1.1014.04-1.3915.911.8715.41-0.50 Avg.collec.period0.050.04-0.010.040.000.040.000.040.00 Payables turnover16.8715.26-1.6118.643.3816.29-2.3512.73-3.56 Days of cash6.208.111.916.28-1.8331.6725.3938.186.51

15. Home Previous Next Help UAL Expenses

16. Home Previous Next Help Industry Ratios

17. Home Previous Next Help Industry Ratios

18. Home Previous Next Help Selected Company Figures ($ in millions)CALAMRDALUSAirUAL Net Income-$95-$1,562-$1,216$1,989-$2,145 Net Sales$8,969$17,484$13,879$8,253$16,138 A/R$404$1,371$368$272$1,047 Cash$1,132$117$2,210$537$1,688

19. Home Previous Next Help Recommendations Liquidation –$72 Million Cut –$500 Million in Future –$572 Million in Cost Reduction Continue Strategies Changing System –American Airlines –Long-term Contracts

20. Home Previous Next Help Questions?