First years
United Airlines (until 1974 United Air Lines) traces its corporate history to Varney Air Lines, a mail carrier founded in Boise, Idaho, by U.S. military pilot and entrepreneur Walter Varney, which began operations on April 6, 1926, on CAM Route 5 from Elko to Pasco.
United is thus the oldest commercial airline still active in the USA. Boeing founder William Boeing established his own airline, Boeing Air Transport, in 1927, buying out Varney Air Lines. The Boeing Airplane and Transport Corporation, formed in 1928 (combining the airplane manufacturing and airline divisions), became the United Aircraft and Transport Corporation (UATC) in 1929 with engine manufacturer Pratt & Whitney and other aircraft manufacturers. In 1931, Boeing Air Transport and the purchased airlines within UATC eventually merged to form United Air Lines, under which name passenger and mail flights were offered. Walter Varney founded Varney Speed Lines in 1934, which after its sale eventually became Continental Airlines in 1937. United was the world's first airline to employ flight attendants, then trained nurses, beginning in 1930 (while still known as Boeing Air Transport). Before that, there had only been male stewards.
In 1932, United Air Lines ordered a fleet of 59 Boeing 247's. Until the order was complete, no other airline received this aircraft, which was considered the most modern and fastest aircraft of the time in the United States. The lead only lasted until 1934, however, when Transcontinental and Western Air (T&WA) put the Douglas DC-2 into service. That same year, William Boeing was forced to split his company as a result of the airmail scandal. This eventually resulted in the independent United Air Lines. Starting in 1935, American Airlines operated the Douglas DC-3, and in one fell swoop, the United Air Lines fleet was considered obsolete, because compared to the Boeing 247, the Douglas planes were faster and more comfortable. In addition, the seating capacity was larger.
In October 1935, a group of United employees formed a separate credit union for the workforce called United Air Lines Employees' Credit Union, with 146 members joining by year's end. Until 2003, when the bank was spun off as Alliant Credit Union with 270 employees as part of United's bankruptcy, membership was reserved for United employees and, since the 1990s, their dependents; since then, other individuals from certain groups of people have been admitted. The credit union does not accept cash and has allowed its members to conduct banking transactions primarily via telephone or online banking since the 1980s and 1990s, respectively. In 2010, it acquired Continental Federal Credit Union (founded in 1952) as part of its merger with Continental. Alliant had more than 280,000 customers in the early 2010s, over $7 billion in assets, was considered one of the largest credit unions in the U.S. at the time, and operated 15 branches located primarily at airports.
Jet Age
The first jet aircraft was the Douglas DC-8, and United ordered 30 of this type on May 29, 1959, with deliveries beginning on September 18, 1959. In the following years, the company procured another 80 aircraft of this type. From Boeing, United Air Lines bought the 720, a smaller version of the 707.
In February 1960, Sud Aviation received an order for 20 Caravelle. Shortly afterwards, United Air Lines initially ordered 40 Boeing 727s. When reordering this type, United also procured Quick Convertible versions, which could be converted so quickly that aircraft carried passengers during the day and cargo at night.
On June 1, 1961, United Air Lines took over the American Capital Airlines, whose route network covered the east coast of the United States, becoming the second largest airline in the world after Aeroflot. The first wide-body aircraft was the Boeing 747, which United received on June 23, 1970. United also unsuccessfully sought permission from the highly-regulated American aviation sector to operate international routes from the 1960s until the 1980s.
In 1974, United introduced a new corporate design in the colors orange, red, blue and with the now famous "U" at the tail. At the same time, the company changed its name from United Air Lines to United Airlines.
In 1968, the parent company UAL, Inc. had been founded as a holding company with the aim of diversification. In the following years, UAL, Inc. acquired the hotel chains Westin (1970) and Hilton (1986) as well as the car rental company Hertz for 587.5 million dollars (1985). United had also launched the central reservation system Apollo in 1971 and from then on presented itself as an overarching travel group.
1980s
In 1981, United launched its Mileage Plus frequent flyer program, which still exists today. In 1982, it became the first airline to put the Boeing 767-200 into service. In 1983, the airline launched its first trans-Pacific route with service to Tokyo. By the end of that year, it had added 12 more Pacific routes. In 1985, United acquired from the loss-making Pan American World Airways, along with some of its flight personnel, the scheduled airline rights for additional Pacific routes for $715.5 million, along with the Boeing 747SP and Lockheed TriStar aircraft. United, which had previously been limited to a domestic route network (since 1984 United had been the only U.S. airline to fly to all 50 U.S. states), transformed itself from the mid-1980s into one of the world's largest international airlines.
Beginning in 1983, United was required by a court decision to rehire 400 former stewardesses who had been terminated in the 1960s because they had married. About 1,800 flight attendants had been fired at the time for violating what was subsequently found to be a discriminatory company rule and common practice at the time requiring stewardesses to remain unmarried.
Moreover, in the early summer of 1985, a bitter labor dispute by United pilots ended in a nearly month-long strike for a better collective bargaining agreement, during which at its peak only 14% of original operations could be maintained, inevitably affecting flight attendant personnel, and resulting in immense financial losses to the company.
In early 1987, UAL, Inc. was renamed Allegis Corporation. That same year, after a failed attempt at employee ownership pushed by the pilots' union (ALPA), the Hilton (to Ladbrokes) and Hertz (to a Ford subsidiary) subsidiaries were sold. The sale of Westin occurred in 1988 to Japan's Aoki Corporation. Also in 1988, Allegis was renamed UAL Corporation, whose principal subsidiary was now United Airlines, Inc.
1990s
United began scheduled service to Europe in May 1990 with two flights to Frankfurt. In 1990, United bought the route rights of the financially troubled Pan Am to London Heathrow and launched the service in April 1991. Until 2007, under the so-called Bermuda II Agreement, only two US airlines were allowed to fly to Heathrow on routes between London and the USA for protectionist reasons, in addition to two British airlines (British Airways and Virgin Atlantic): for decades, these were Pan Am and TWA. The latter sold its route rights to American Airlines almost simultaneously. In taking over these exclusive route rights, United also established a base for flight attendants at Heathrow Airport in 1991, recruiting non-US citizens as cabin crew in the face of union opposition. By the early 1990s, United also offered flights from Heathrow to Berlin, Hamburg and Munich under the Bermuda II agreement. As part of its international expansion, additional routes were taken over from the now insolvent Pan Am in the 1990s. United also opened additional stationing locations for its flight attendants outside the United States with locally hired cabin crew, including in Paris (1992-2006), Santiago de Chile (1995-2002), and Taipei (1993-2003). In Singapore (1986-2001 as well as 2006-2008) and Bangkok, the company maintained stations for locally recruited flight attendants who worked exclusively on United flights within Asia, wore different uniforms from other United cabin crew according to union specifications, and did not work with the latter. The flight attendant base in London (since 1991) continues to this day. In June 2020, United management decided to close the cabin crew stations in Hong Kong (opened in 1995), Tokyo (from 1996) and Frankfurt am Main (from 1996) due to the COVID-19 pandemic, transferring the U.S. and green card holders employed there to the U.S. and summarily dismissing the remaining workforce, nearly 600 employees.
In mid-1992, United ordered 50 of the Airbus A320, launched in 1988, the first aircraft in the company's history from the European aircraft manufacturer Airbus, which were delivered at the end of 1993. In 1996, United ordered 24 A319 aircraft. To date, United has no other Airbus aircraft besides these two types, although the airline ordered 25 Airbus A350-900s in March 2010 and converted that order to 35 Airbus A350-1000s in June 2013 and 45 Airbus A350-900s in early September 2017 with expected delivery between 2022 and 2027.
In 1994, after nearly $5 billion in concessions by some of the then 85,000 employees, including pay cuts necessitated by, for example, the emergence of Southwest Airlines as a low-cost carrier, an employee stock ownership plan (ESOP) was established through which parts of the United Airlines workforce held 55% of the company's total share capital. The ESOP shareholders were members of the pilots' union ALPA and over 50,000 members of the International Association of Machinists and Aerospace Workers; 25% of the company alone was owned by the approximately 10,000 United pilots at the time. The flight attendants' union, AFA, had opposed participation and instead won wage increases for cabin crew. As a result, United transformed itself into the world's largest employee-owned corporation. From today's perspective, critics of the ESOP plan complain that employee control of the company (three seats on the board of directors) prevented important personnel decisions from being made at United or that painful but necessary streamlining measures were not initiated much earlier. The employee shares, often accumulated by employees for retirement purposes, were virtually worthless when the ESOP program ended in 2002.
The new gray-blue color scheme was introduced in spring 1993. At the end of 1994, in response to increasing competition from the low-cost carrier Southwest, an "airline within the airline" was launched with Shuttle by United (from 1999: United Shuttle). Shuttle flights were offered at low prices with at last 59 Boeing 737 aircraft and more than 450 daily flights with reduced service mainly between San Francisco and Los Angeles, but also other airports in the western part of the USA. The concept, which was quite profitable in the late 1990s, was finally discontinued in October 2001 and the aircraft reintegrated into the main fleet.
In 1995, United Airlines put the then-new Boeing 777-200 into service, in the development of which the company played a major role. From the end of 1995, after three years of resistance from its own pilots, United became the only airline in the world to offer scheduled around-the-world service from Los Angeles via Newark, London, New Delhi and Hong Kong back to Los Angeles (in both westbound and eastbound directions with the continuous flight number "1" and "2" respectively) on United aircraft by adding New Delhi as a destination. Previously, only Pan Am had offered flights around the world with its own scheduled flights from 1947 to 1982. In 1999, service to New Delhi, and with it round-the-world service, was temporarily suspended due to the Asian crisis, resumed in 2001, and finally ended a few years later. In May 1997, United Airlines, along with Lufthansa, Air Canada, SAS, and Thai Airways, formed the Star Alliance, with United ranking as the world's largest airline in the late 1990s until it was overtaken by American Airlines through its merger with Trans World Airlines (TWA) in January 2001. The period between 1995 and the late 1990s was economically successful for United Airlines, due in part to the New Economy. In 1997, United's stock price just reached the $100 mark and the company employed nearly 100,000 people during those years.
Smoking has been banned on all United flights worldwide since July 1997, following a U.S. law prohibiting smoking on U.S. domestic flights of less than two hours in duration since 1988 and generally since 1990. In 1971, United became the first U.S. airline to install separate smoking compartments on its planes. By the mid-1990s at the latest, United began banning smoking on more and more flights on its international network as well. Most recently, the company only allowed passengers to smoke on selected routes between the US and South America or Asia.
2000s
The CEO at the time, James Goodwin, reached a collective bargaining agreement with the company's pilots in mid-2000 that included wage increases of up to almost 30 % after the pilots' union ALPA had massively impeded flight operations through strategic measures. Goodwin's motivation was a planned takeover of competitor US Airways, for which he needed the votes of the pilots' representatives on the Board of Directors and the backing of the company's pilots. However, this takeover was ultimately blocked by the US Department of Justice. US Airways subsequently joined the Star Alliance. Due to high wage obligations, the failed takeover strategy, and declining revenue due to the dot-com bubble bursting in early 2000, United fell into a financial crisis. For the first half of 2000, United reported losses of more than $1 billion.
Restructuring as of 2001
In the wake of the terrorist attacks on September 11, 2001, two American Airlines planes were hijacked, as were two United planes. One Boeing 767 (Flight 175) crashed into one of the Twin Towers of the World Trade Center in New York. The second Boeing 757 plane (Flight 93) - which is believed to have been intended to hit the Capitol or the President's official residence - crashed in Pennsylvania.
Following immense revenue losses as a result of the financial crisis affecting all major US airlines following the terrorist attacks, and finally due to the refusal of credit assistance from the government, the company began bankruptcy proceedings in the USA under creditor protection on 9 December 2002. Operations have continued uninterrupted since then. In addition, the company had to contend with high wage costs, labor disputes, the inefficient organizational structure, rising fuel prices, and increasing competition from low-cost airlines in the U.S. market. The result was numerous layoffs as part of drastic cost-cutting measures. Of the original 100,000 employees, just under 57,000 remained in 2003. Unpaid leaves of absence, wage and salary cuts, the termination of pension obligations, the closure of all city offices in the USA, the temporary shutdown of some aircraft and the cancellation of some existing and planned flight connections were further consequences. The ESOP employee stock ownership plan was terminated, and the company's shares were still worth around 60 cents in 2003. The Miami location lost its status as an international gateway to South America, and the base for cabin crews there was closed. International stations for cabin crews in Santiago de Chile, Taipei and Paris were also closed.
For all the rationalisation measures, the company launched a number of projects during the reorganisation phase, most of which have been maintained to date:
- United successively converted the front rows of the Economy cabins of its entire fleet and set up so-called Economy Plus zones as Premium Economy Class, which are distinguished from the rest of the cabin by more legroom (about 12 cm) and are intended to act as a link between Economy and Business Class. The Economy Plus project had already been launched in 1999. These rows of seats are generally reserved for frequent flyers and holders of expensive tickets. However, passengers with reduced-price tickets can also purchase Economy Plus seats for an additional charge if they are still available at short notice.
- At the end of 2003, the company's subsidiary Ted (last syllable of United), similar to Shuttle by United before it, began its service from its own hub in Denver in response to the American low-cost carriers. In addition to an extensive domestic route network, Ted also offered service to three destinations in Mexico, such as Cancún. On June 3, 2008, United announced that it would integrate its subsidiary Ted back into its main fleet on January 4, 2009. The fleet most recently consisted of 56 Airbus A320 aircraft, each carrying 156 passengers.
- In 2004, the prestigious p.s. - Premium service was launched on routes between New York and Los Angeles and San Francisco with reconfigured Boeing 757s divided into three classes of service (converted to two-class seating in 2012).
- In autumn 2004, a new corporate design was introduced again after only nine years. A Boeing 777-200 was the first aircraft to receive the new white and blue livery.
- In December 2004, the connection from San Francisco to Ho Chi Minh City (Saigon) in Vietnam was launched. There had been no service by a US airline to Vietnam since the end of the Vietnam War in 1975.
- At the beginning of 2006, United introduced the explus product on feeder routes using regional jets. The smaller aircraft of the United Express route network with 60 to 70 seats, which were previously all Economy, were expanded to include a First Class cabin with leather seats and an Economy Plus section with more legroom. There are no unpopular middle seats on board. Food will again be served on flights over 2.5 hours.
United's CEO at the time, Glenn Tilton, who had originally been brought into the company in 2002 to avert insolvency, announced at the end of 2005 that the airline was financially stronger and far better off than it had been three years earlier. Excluding the costs of restructuring the company - US$370 million had been spent on management consulting and legal advice alone - United posted an operating profit of US$165 million in the third quarter of 2005. A consortium led by Citigroup and JP Morgan provided the company with US$2.5 billion in fresh capital.
According to statements in the press, United operated at that time with costs that were only 20 % higher than those of the so-called low-cost carriers. However, the 20 % higher costs were not to be tried to be pushed down further, but it was assumed that the service offered with several classes, lounges, food and drinks justified a moderate additional price.
Termination of creditor protection 2006
On February 1, 2006, after a three-year restructuring period, United Airlines formally ended its insolvency proceedings by submitting a reorganization plan. During this time, the airline's annual costs had been reduced by approximately US$7 billion, which had involved the sale of approximately 100 aircraft and meant two pay cuts for many of the employees.
One day after the termination of creditor protection, the parent company UAL Corporation was listed as a public company on the NASDAQ in New York with 3.7 million shares (symbol: UAUA). The value of one share at the end of the first trading day was approximately US$37. The issue price had been set at US$40. On the previous day, the stock traded at a pretrading price of US$42.50. In the run-up, analysts had speculated for the issue price with an estimate of about US$15. United's CEO Glenn Tilton opened the NASDAQ stock market that morning with a live feed from Chicago O'Hare Airport. The company's old shares, which were listed on the NYSE with a unit value of US$0.13, thus became worthless. In mid-January 2007, the stock briefly surpassed the $50 mark.
Consolidation in the US aviation market as of 2007
Rumours of a merger between United and one of the other major US carriers, such as the then financially strengthened US Airways, had been circulating since the time of creditor protection, even if CEO Glenn Tilton denied this at the time. However, these speculations were supported by, among other things, the fact that top management had secured blocks of shares worth around US$10 million for themselves when the new shares were issued. An "Employee Stock Incentive Plan" distributed shares worth US$2 billion among all remaining employees. At the beginning of 2007, when speculation about a takeover of Delta Air Lines by US Airways was circulating in the media, it was also suspected that United might take over its competitor Continental Airlines as part of a wave of consolidation in the US airline sector. There was no official statement on this from any of the airlines.
Glenn Tilton, however, was an outspoken proponent of consolidation in the US airline segment. He had campaigned for a change in US law that would have allowed a greater share of foreign investors in US airlines - one of the conditions not yet implemented for the Open Skies agreement between the US and the EU that came about in 2007. The law has not yet been changed in the USA.
Since late 2007, early 2008, there has been renewed speculation that United might merge with Delta Air Lines, after hedge fund Pardus Capital Management, which held shares in both airlines, suggested it. However, since a merger of Delta Airlines and Northwest Airlines would have brought greater potential savings, it was speculated even then that United might merge with Continental Airlines in return. All airlines involved declined to comment. On April 14, 2008, the merger of Delta Air Lines and Northwest Airlines to form the world's largest airline was officially announced. A merger between United and Continental Airlines that would have surpassed Delta and Northwest in size was ruled out by Continental on April 26, 2008.
2010s
Merger with Continental Airlines 2010
In April 2010, it was reported that United was again in merger talks with US Airways. At the same time, it was suspected that these talks were intended to persuade Continental Airlines to reconsider a merger with United - which would have offered a greater increase in combined market value than a merger with US Airways. The biggest hurdle to a merger was the unions represented in the companies by the various employee groups. On May 3, 2010, it was announced that United would merge with Continental under the United Airlines brand name. In doing so, United acquired Continental Airlines for $3.2 billion in stock. Chairman and CEO of the new United became Jeff Smisek, who had been CEO of Continental Airlines until the merger. Glenn Tilton moved to a supervisory role within the company's board of directors. At the end of September 2010, the merger process began under the umbrella of the new parent company United Continental Holdings, which renamed itself United Airlines Holdings in June 2019.
The Air Operator Certificate of the two companies was to be merged as of November 11, 2011. This step was finally taken on 1 December 2011 and the two companies subsequently flew legally as one airline. On March 3, 2012, the last flight under the Continental Airlines name took place. Since then, all flights have been operated under the name United Airlines, although internally the separate operations of the two airlines, for example with regard to crew, were not fully abandoned until October 1, 2018 due to separate collective bargaining agreements.
Since the merger with Continental Airlines, the route networks of Continental, Continental Express, Continental Connection, Continental Micronesia and Continental Cargo have belonged to the company, which has all operated under the name United Airlines since March 3, 2012.
Since the merger with Continental, United has been the only U.S. airline to maintain its own catering company, Chelsea Food Services, for its aircraft meals. The company was owned by Continental Airlines until the merger. United had contracts with Gate Gourmet and LSG Sky Chefs before the merger.
As of 2011
In 2011, to mark the airline's 85th anniversary, an Airbus A320-200 with aircraft registration N475UA and the christening "Friend Ship" was repainted in the 1970s color scheme. According to United, the historic livery was selected after a staff vote.
In June 2012, it was announced that United Airlines will reduce its activities at Houston Airport, as the city has approved the competitor Southwest Airlines long-haul flights from Houston Hobby Airport. Thus, the new route from Houston to Auckland, which was to be operated with the new Boeing 787Dreamliner, will not be realized, as well as some other unprofitable long-haul routes will be canceled. Part of the activities will be transferred to Denver Airport.
In 2013, United retired both its last Boeing 737-500s and its remaining Boeing 767-200ERs.
In June 2015, United announced its intention to acquire a 5% stake in Brazilian airline Azul Linhas Aéreas for US$100 million. At the same time, the two companies intend to enter into a strategic alliance that will include code sharing and mutual benefits in the respective frequent flyer programs. United will take a seat on Azul's board of directors.
In May 2016, United announced it would discontinue its last service to Africa on July 1, 2016, with the Houston-Lagos route. In June 2016, United announced the launch of United Polaris in December 2016. Named after the North Star as a landmark for travelers, the product will improve amenities and service in premium cabins, particularly on international flights. Business First Class will be renamed United Polaris Business Class, and until it is eliminated, Global First Class will transition to United Polaris Global First on three-class aircraft. The new concept, which also includes the opening of new Polaris airport lounges, will eliminate unpopular middle seats in the forward cabin areas and offer upscale in-flight dining and other amenities.
On 9 April 2017, a passenger on United Express Flight 3411 operated by Republic Airline from Chicago to Louisville on behalf of United was forcibly removed from the aircraft at Chicago O'Hare International Airport by three security officers from the Chicago Department of Aviation (CDoA), who had been called in, and injured in the process after he had repeatedly refused to leave the aircraft. The background to the incident was that, at short notice, Republic Airline flight personnel were to travel on the fully booked flight for operational reasons (dead-head flight) and four booked passengers who were already on board had to give up their seats for this purpose. After considerable media criticism and international coverage of videos of the incident shot by passengers and posted on the Internet, CEO Oscar Muñoz publicly apologized, having previously defended the actions of his employees in internal emails. The stock value lost more than four percent for a few days at its peak due to the incident. In response, United announced a 10-point plan to prevent future incidents of this kind. Representatives of American airlines, including Muñoz, were then summoned to a congressional hearing. The CDoA initially placed the three security officers involved and their supervisors on leave, subsequently terminated the officer who injured the passenger and his supervisor, and imposed disciplinary sanctions on the remaining two officers. As a consequence, the word "Police" was removed from the uniforms of all CDoA security officers. Since then, Chicago Police Department officers have been responsible for incidents of this nature. The passenger in question and his lawyers subsequently settled out of court with United.
Like the entire industry, United suffered massive losses in the summer of 2020 due to the COVID-19 pandemic. At the end of July, a forced furlough for a third of all pilots was in prospect for September. Until then, the company was supported by the state in paying wages. The company estimated the total loss for the third quarter at 25 million dollars per day.
