UAL Corporation
Encyclopedia
UAL Corporation is the former name of United Continental Holdings
an airline
holding company
, incorporated in Delaware
with headquarters in Chicago, Illinois. UAL held a 100 percent controlling interest in United Air Lines, Inc.
, one of the world's largest air carriers, and is a founding member of the Star Alliance
. It was announced on May 3, 2010 that UAL Corporation and Continental Airlines, Inc. would pursue a merger pending government approval. UAL Corporation will acquire Continental Airlines, Inc. and change its name to United Continental Holdings, Inc.
(UCH). On October 1, 2010, UCH, formerly UAL Corporation, announced completion of the merger.
UAL Corp. passed to its successor major operations at Chicago-O'Hare, Denver, Los Angeles, San Francisco, and Washington-Dulles International Airport. UAL's United Air Lines, Inc. controlled several key air rights, including having been one of only two American carriers authorized to serve Asia from Tokyo-Narita. Additionally, UAL's United was the largest U.S. carrier to the People’s Republic of China and maintained a large operation throughout Asia..
as part of a reorganization of United Airlines
, now its largest subsidiary, whose history is considerably longer. UAL, Inc. was the creation of then United Air Lines president George Keck, who formed the holding company to allow United to diversify.
Between 1970 and 1988 UAL, Inc. would acquire and operate the Westin
and Hilton hotel chains and the Hertz Corporation car rental company, as well as a regional airline, a reservations network, and several leasing and insurance companies. On April 30, 1987, UAL, Inc. changed its name to Allegis Corporation. Many Wall Street analysts however believed that Allegis' profitable subsidiaries were worth more individually than the parent company's stock price indicated. Reacting on this sentiment, just weeks after the company changed its name, a group led by United Airlines employees moved to acquire ownership. However, the group was unable to acquire the needed financing and Allegis' management sold its non-airline subsidiaries. On May 26, 1988, Allegis changed its name to UAL Corporation, with United Air Lines, Inc. as its only major subsidiary.
United Airlines employees continued the effort to buy the airline's parent company however and in 1993, the effort moved closer to realization. The Board of Directors of UAL in December 1993 agreed to an Employee Stock Ownership Plan (ESOP), where employees would agree to salary and benefit reductions as well as work rule changes in exchange for stock. Employees would have an equity stake of 55%, thus making them the majority owners of UAL Corporation. UAL became the world's largest employee-owned company.
During the mid-1990s the scheme worked well for UAL. The company was able to turn around its finances, which were weakened by the recession in early part of the decade and the divestiture of Allegis' money-making assets. In the late 1990s UAL's United Airlines subsidiary would grow to be the world's largest airline, as well as one of the most profitable.
Yet in 2000, UAL's fortunes began to dim. In April 2000, the ESOP investment period ended for most US employees, prompting United's unions to fight for higher wages. Labor issues, air traffic congestion and poor weather forced UAL's United unit to implement widespread flight cancellations in the summer of 2000, harming the airline's reputation. Additionally, UAL Corporation announced its intent to merge with US Airways Group, Inc., the operator of American airline US Airways. The deal collapsed in mid-2001, due to lack of support from the U.S. government and employees. Then came the tragedy of September 11. The company ended 2001 with a record loss of $2.1 billion.
As losses continued in 2002, Glenn Tilton, a former Texaco
CEO with experience operating a company in bankruptcy, was brought in by UAL's Board of Directors to try and prevent bankruptcy, or, if needed, successfully guide the company through a bankruptcy process. Tilton was appointed Chairman, President, and CEO of UAL Corporation and United Air Lines, Inc. in September 2002. Tilton sought wage cuts from employees and applied for a U.S. government loan guarantee to avoid filing for bankruptcy. By early December, the company had reached agreements with most of its unions for wage reductions, but its loan application was rejected Dec. 4. On Dec. 9, UAL and its subsidiaries filed for Chapter 11 reorganization. UAL quickly received debtor-in-possession (DIP) financing to allow it to continue "business as usual" while it reorganized its debt, capital and cost structures. The year ended with UAL seeking immediate voluntary wage reductions from all employee groups or permission from the bankruptcy court to impose those reductions in order to meet the strict covenants established by the DIP lenders.
What followed would be one of the largest, longest, and most complex bankruptcy cases in US history. UAL Corporation and its subsidiaries emerged from bankruptcy protection on February 1, 2006.
On December 8, 2009, UAL Corporation announced that it has placed an order for 25 Airbus A350 and 25 Boeing 787 aircraft, with purchase rights for 50 more of each aircraft. UAL Corp. will be the second US carrier to operate the Airbus A350.
The years since bankruptcy have been marked by mixed results for UAL. The company turned a profit in 2007, yet the fuel crisis in the summer 2008, where NYMEX Light Sweet Crude reached almost $150 a barrel, pushed the company into losses. To try to put an end to UAL's decades of boom and bust cycles, CEO Tilton has been pushing for a merger with another major US carrier. Tilton has stated he believes that having larger market-share and a more diverse route network are the way for UAL to reach sustainable profitability, though many, including UAL's unions groups, have strongly disagreed. In early 2008 UAL Corporation held merger talks with American airline operator Continental Airlines, Inc. However, the deal was called off after problems in the credit markets, as well as weak support from labor groups, made an official merger impossible. UAL's United instead decided to form an alliance with Continental.
However, in May 2010 United announced a full-scale merger between the two carriers. The new airline will use the trade name United Airlines with the Continental logo.
The company's subsidiaries at the time of the merger were:
United Continental Holdings
United Continental Holdings, Inc. , is a publicly traded airline holding company, incorporated in Delaware with headquarters in the United Building in Chicago, Illinois. UCH owns and operates United Airlines, Inc. and Continental Airlines, Inc. both of which use the trade name United Airlines...
an airline
Airline
An airline provides air transport services for traveling passengers and freight. Airlines lease or own their aircraft with which to supply these services and may form partnerships or alliances with other airlines for mutual benefit...
holding company
Holding company
A holding company is a company or firm that owns other companies' outstanding stock. It usually refers to a company which does not produce goods or services itself; rather, its purpose is to own shares of other companies. Holding companies allow the reduction of risk for the owners and can allow...
, incorporated in Delaware
Delaware
Delaware is a U.S. state located on the Atlantic Coast in the Mid-Atlantic region of the United States. It is bordered to the south and west by Maryland, and to the north by Pennsylvania...
with headquarters in Chicago, Illinois. UAL held a 100 percent controlling interest in United Air Lines, Inc.
United Airlines
United Air Lines, Inc., is the world's largest airline with 86,852 employees United Air Lines, Inc., is the world's largest airline with 86,852 employees United Air Lines, Inc., is the world's largest airline with 86,852 employees (which includes the entire holding company United Continental...
, one of the world's largest air carriers, and is a founding member of the Star Alliance
Star Alliance
Star Alliance is the world's first and largest airline alliance, headquartered in Frankfurt am Main, Germany . The alliance was founded in 1997 by five of the world's leading airlines: Air Canada, Lufthansa, Scandinavian Airlines, Thai Airways International and United Airlines...
. It was announced on May 3, 2010 that UAL Corporation and Continental Airlines, Inc. would pursue a merger pending government approval. UAL Corporation will acquire Continental Airlines, Inc. and change its name to United Continental Holdings, Inc.
United Continental Holdings
United Continental Holdings, Inc. , is a publicly traded airline holding company, incorporated in Delaware with headquarters in the United Building in Chicago, Illinois. UCH owns and operates United Airlines, Inc. and Continental Airlines, Inc. both of which use the trade name United Airlines...
(UCH). On October 1, 2010, UCH, formerly UAL Corporation, announced completion of the merger.
UAL Corp. passed to its successor major operations at Chicago-O'Hare, Denver, Los Angeles, San Francisco, and Washington-Dulles International Airport. UAL's United Air Lines, Inc. controlled several key air rights, including having been one of only two American carriers authorized to serve Asia from Tokyo-Narita. Additionally, UAL's United was the largest U.S. carrier to the People’s Republic of China and maintained a large operation throughout Asia..
History
UAL, Inc., as the company was first known, was incorporated December 30, 1968 as a Delaware corporationDelaware corporation
The Delaware General Corporation Law is the statute governing corporate law in the state of Delaware. Delaware is well known as a corporate haven. Over 50% of U.S...
as part of a reorganization of United Airlines
United Airlines
United Air Lines, Inc., is the world's largest airline with 86,852 employees United Air Lines, Inc., is the world's largest airline with 86,852 employees United Air Lines, Inc., is the world's largest airline with 86,852 employees (which includes the entire holding company United Continental...
, now its largest subsidiary, whose history is considerably longer. UAL, Inc. was the creation of then United Air Lines president George Keck, who formed the holding company to allow United to diversify.
Between 1970 and 1988 UAL, Inc. would acquire and operate the Westin
Westin Hotels
Westin Hotels & Resorts are an upscale hotel chain owned by Starwood Hotels & Resorts Worldwide. As of 2011, Westin operated over 160 hotels in 37 countries.-History:...
and Hilton hotel chains and the Hertz Corporation car rental company, as well as a regional airline, a reservations network, and several leasing and insurance companies. On April 30, 1987, UAL, Inc. changed its name to Allegis Corporation. Many Wall Street analysts however believed that Allegis' profitable subsidiaries were worth more individually than the parent company's stock price indicated. Reacting on this sentiment, just weeks after the company changed its name, a group led by United Airlines employees moved to acquire ownership. However, the group was unable to acquire the needed financing and Allegis' management sold its non-airline subsidiaries. On May 26, 1988, Allegis changed its name to UAL Corporation, with United Air Lines, Inc. as its only major subsidiary.
United Airlines employees continued the effort to buy the airline's parent company however and in 1993, the effort moved closer to realization. The Board of Directors of UAL in December 1993 agreed to an Employee Stock Ownership Plan (ESOP), where employees would agree to salary and benefit reductions as well as work rule changes in exchange for stock. Employees would have an equity stake of 55%, thus making them the majority owners of UAL Corporation. UAL became the world's largest employee-owned company.
During the mid-1990s the scheme worked well for UAL. The company was able to turn around its finances, which were weakened by the recession in early part of the decade and the divestiture of Allegis' money-making assets. In the late 1990s UAL's United Airlines subsidiary would grow to be the world's largest airline, as well as one of the most profitable.
Yet in 2000, UAL's fortunes began to dim. In April 2000, the ESOP investment period ended for most US employees, prompting United's unions to fight for higher wages. Labor issues, air traffic congestion and poor weather forced UAL's United unit to implement widespread flight cancellations in the summer of 2000, harming the airline's reputation. Additionally, UAL Corporation announced its intent to merge with US Airways Group, Inc., the operator of American airline US Airways. The deal collapsed in mid-2001, due to lack of support from the U.S. government and employees. Then came the tragedy of September 11. The company ended 2001 with a record loss of $2.1 billion.
As losses continued in 2002, Glenn Tilton, a former Texaco
Texaco
Texaco is the name of an American oil retail brand. Its flagship product is its fuel "Texaco with Techron". It also owns the Havoline motor oil brand....
CEO with experience operating a company in bankruptcy, was brought in by UAL's Board of Directors to try and prevent bankruptcy, or, if needed, successfully guide the company through a bankruptcy process. Tilton was appointed Chairman, President, and CEO of UAL Corporation and United Air Lines, Inc. in September 2002. Tilton sought wage cuts from employees and applied for a U.S. government loan guarantee to avoid filing for bankruptcy. By early December, the company had reached agreements with most of its unions for wage reductions, but its loan application was rejected Dec. 4. On Dec. 9, UAL and its subsidiaries filed for Chapter 11 reorganization. UAL quickly received debtor-in-possession (DIP) financing to allow it to continue "business as usual" while it reorganized its debt, capital and cost structures. The year ended with UAL seeking immediate voluntary wage reductions from all employee groups or permission from the bankruptcy court to impose those reductions in order to meet the strict covenants established by the DIP lenders.
What followed would be one of the largest, longest, and most complex bankruptcy cases in US history. UAL Corporation and its subsidiaries emerged from bankruptcy protection on February 1, 2006.
On December 8, 2009, UAL Corporation announced that it has placed an order for 25 Airbus A350 and 25 Boeing 787 aircraft, with purchase rights for 50 more of each aircraft. UAL Corp. will be the second US carrier to operate the Airbus A350.
The years since bankruptcy have been marked by mixed results for UAL. The company turned a profit in 2007, yet the fuel crisis in the summer 2008, where NYMEX Light Sweet Crude reached almost $150 a barrel, pushed the company into losses. To try to put an end to UAL's decades of boom and bust cycles, CEO Tilton has been pushing for a merger with another major US carrier. Tilton has stated he believes that having larger market-share and a more diverse route network are the way for UAL to reach sustainable profitability, though many, including UAL's unions groups, have strongly disagreed. In early 2008 UAL Corporation held merger talks with American airline operator Continental Airlines, Inc. However, the deal was called off after problems in the credit markets, as well as weak support from labor groups, made an official merger impossible. UAL's United instead decided to form an alliance with Continental.
However, in May 2010 United announced a full-scale merger between the two carriers. The new airline will use the trade name United Airlines with the Continental logo.
Directors
The directors of UAL Corporation at the time of the merger were:- Glenn F. Tilton, Chairman/President/CEO
- Wendy Morse (Pilots' Union)
- Stephen R. Canale (Machinist & Aerospace Workers union)
- W. James FarrellW. James FarrellW. James Farrell is an American businessman, known for being the CEO of Illinois Tool Works from 1995 to 2005.Farrell was in the United States Army from 1965 to 1967 of his military service...
- David J. Vitale
- Robert D. Krebs
- Robert S. MillerRobert S. MillerRobert S. "Steve" Miller was hired as Delphi chairman by General Motors and Delphi Corporation to file bankruptcy. Known as a restructuring expert, he was hired to slash costs and close unprofitable operations. Miller, who was hired in July 2005 filed bankruptcy Saturday, October 8, 2005. ...
- James J. O'Connor (Lead Director)
- Mary K. Bush
- John H. Walker
- Richard J. Almeida
- Walter IsaacsonWalter IsaacsonWalter Isaacson is a writer and biographer. He is the President and CEO of the Aspen Institute, a nonpartisan educational and policy studies organization based in Washington, D.C. He has been the Chairman and CEO of CNN and the Managing Editor of TIME...
- Jane F. GarveyJane GarveyJane Garvey was head of the U.S. Federal Aviation Administration from 1997 to 2002.-Biography:Garvey earned her B.A. from Mount Saint Mary College and her M.A...
Subsidiaries
- United Air Lines, Inc.United AirlinesUnited Air Lines, Inc., is the world's largest airline with 86,852 employees United Air Lines, Inc., is the world's largest airline with 86,852 employees United Air Lines, Inc., is the world's largest airline with 86,852 employees (which includes the entire holding company United Continental...
(including United Cargo)- Covia, LLC
- Domicile Management Services, Inc. (also subsidiary of Air Wis Services)
- Kion de Mexico, S.A. de C.VKion de MexicoKion de Mexico, founded in 1994, is an aircraft ground services company and airlines related outsourcing company at Mexico City International Airport. The company is a subsidiary of United Continental Holdings...
- Kion Leasing, Inc.
- Premier Meeting and Travel Services, Inc.
- UAL Loyalty Services Inc. (loyalty programs and travel clubs, including United Cruises)
- Mileage Plus Holdings Inc.
- Mileage Plus Marketing, Inc. (administers the Mileage Plus frequent flyer programFrequent flyer programA frequent flyer program is a loyalty program offered by many airlines. Typically, airline customers enrolled in the program accumulate frequent flyer miles corresponding to the distance flown on that airline or its partners. There are other ways to accumulate miles...
)
- Mileage Plus Marketing, Inc. (administers the Mileage Plus frequent flyer program
- ULS Ventures, Inc.
- Mileage Plus Holdings Inc.
- United Air Lines Ventures, Inc.
- United Aviation Fuels Corporation (fuel purchasing unit)
- United Cogen, Inc. (develops and operates cogeneration and power projects)
- United GHS, Inc. (ground handling services)
- United Vacations Inc.
- United Worldwide Corporation
- Air Wis Services, Inc.
- Air Wisconsin, Inc. (not to be confused with Air Wisconsin Airlines CorporationAir WisconsinAir Wisconsin Airlines Corporation is an airline based at Outagamie County Regional Airport in the town of Greenville, Wisconsin, United States, near Appleton. Air Wisconsin is the largest privately held regional airline in the United States...
, an independent corporation and former United ExpressUnited ExpressUnited Express is a brand name under which eight regional airlines operate feeder flights for United Airlines. They primarily connect smaller cities with United's domestic hub airports and “focus cities,” although they offer some point-to-point service such as Sacramento to Eureka.As of Sept...
partner) - Domicile Management Services, Inc. (also subsidiary of United Airlines)
- Air Wisconsin, Inc. (not to be confused with Air Wisconsin Airlines Corporation
- Four Star Insurance Company, Ltd.
- Four Star Leasing, Inc.
- UAL Benefits Management, Inc.
- UAL Company Services Inc.