United Airlines has been around a long time and has a huge globe-spanning presence. How did it get to where it is today? We try to wrap our heads around the company's somewhat complicated history.
With its history dating back to the 1920s, United Airlines has grown over the last 90-plus years into one of the world’s largest carriers. Through a combination of mergers, acquisitions, and organic expansion, United’s network today includes 356 destinations and seven continental U.S. hubs (Chicago, Houston, Newark, Washington Dulles, San Francisco, Denver, and Los Angeles). The Chicago-based airline will serve six continents by the end of 2019 on its own aircraft.
Oscar Munoz is United’s CEO, a position he assumed in 2015. The company lured Scott Kirby from rival American Airlines to become its president the following year. United’s chief financial officer is Gerry Laderman, and Greg Hart is the chief operations officer.
The airline announced in December 2019 a reshuffling of its leadership team. Scott Kirby was promoted to CEO in a long-expected move, with Oscar Munoz shifting to executive chairman of the airline group’s board. The changes will take place in spring 2020.
United runs 49 United Club member lounges in 32 airports. United Polaris lounges, which are designated exclusively for United’s international business class flyers, are also found at five hubs. Its passenger-loyalty program, MileagePlus, debuted in 1982 and will be undergoing an overhaul in early 2020.
United is one of the original founding members of the Star Alliance, joining together with Air Canada, Lufthansa, SAS, and Thai Airways in 1997. The alliance was the first major global airline network, and its membership has since increased to 26 carriers. It also has been granted antitrust immunity with several of those members: Air Canada, carriers in The Lufthansa Group, and Japan’s All Nippon Airways.
Today United Airlines employs approximately 88,000 people and operates 783 mainline aircraft.
A BRIEF HISTORY
United marks its birth as 1926, when Varney Air Lines, a mail carrier, departed Pasco, Washington, on its first flight. Varney Airlines was acquired by United Aircraft and Transportation Corporation in 1930, and all the air providers in that enterprise were eventually spun off in 1934 to become its own separate company — United Air Lines.
United merged with Capital Airlines in 1961 — an important acquisition because it quickly gave United a larger U.S. route network. Capital was one of the biggest American carriers at the time, primarily serving the eastern half of the country.
United embarked on a long period of growth starting in the 1980s. Thanks to deregulation, restrictions on routes U.S. airlines could fly were removed. For the first time, United was able to offer flights overseas. With the fortunes of Pan American World Airways on the decline, United swooped in to purchase the global carrier’s entire Pacific network in 1985. Those initial acquisitions allowed United to develop its brand in Asia and turn itself into an established leader in the transpacific market.
The attacks on September 11, 2001 — when two of United’s flights were lost — and rising oil prices led to a dire economic downturn in the U.S. travel sector during the first years of the 21st century. Those obstacles led United and several of its competitors to file for bankruptcy protection in 2002, and it wasn’t until 2006 that the financial situation improved enough for United to exit.
In the decade to follow, the entire U.S. airline industry underwent a period of major consolidation, with mergers that would transform how the travel market looked.
MERGER WITH CONTINENTAL AIRLINES
The United Airlines of today came together in 2010, when the company agreed to a merger with Houston-based Continental Airlines. At that point, the new combined company became the world’s largest air carrier. The airline retained United’s name and its Chicago home base. Continental’s president and CEO Jeff Smisek was named to fill the same roles of the new United.
But the integration of United and Continental systems came with a fair bit of turbulence. Customer complaints and employee dissatisfaction rose for several years after the merger. A recorded incident of a customer being dragged off a United Express flight in 2017 went viral and led to the worst kind of publicity for United. Accusations that United mistreated pet cargo in 2018 further damaged United’s image and had the company playing damage control.
Smisek proved to be an unpopular leader, and he was forced to resign in 2015 after coming under federal investigation. Oscar Munoz was quickly appointed to replace Smisek. But just a month into his tenure, Munoz suffered a heart attack, which was followed by a heart transplant a few months later in early 2016.
Munoz recovered, returning to the job that year, and has weathered the storms to continue as CEO today. But he relinquished his duties as president when Kirby stepped into that role.
CURRENT GROWTH AND POTENTIAL CHALLENGEs
United has made several additions to its international network in the past two years. With the arrival of more fuel-efficient planes, the carrier has introduced or planned new routes to cities that lacked a direct link to the U.S., such as Cape Town and Palermo. San Francisco and Newark have been the primary beneficiaries of the international expansion, but almost all of its hubs have seen some increases.
Asia continues to play a big role for United, and with its long presence in the region, it’s in a strong position to capitalize on air travel demand there. Potential economic slowdowns and consumer demand, especially in China, could slow expansion, though. Outside of Shanghai and Beijing, United has found it difficult to gain a foothold in China amid competition from local airlines. Of three secondary Chinese cities it started serving earlier this decade, Chengdu is the only destination left.
In the domestic market, its Denver hub has been able to grow considerably, despite the large presence of low-fare airlines at the airport. United offers more than twice the number of flights than its nearest competitor, Southwest. This past summer, United offered more than 500 departures from Denver on some days compared to approximately 360 in 2017. Kirby indicated it could grow even more.
Although not as severely affected as some of its rivals, United has had to deal with having its Boeing 737 Max fleet grounded in 2019. The airline had 14 in operation and had expected to increase that number to 30 by the end of the year. The grounding forced United to either cancel flights or find substitute aircraft.
United’s main competitors are the remaining domestic U.S. legacy carriers — those airlines who were already flying before deregulation in the late 1970s.
American Airlines: A member of the Oneworld alliance, American Airlines is considered the largest airline in the world by passenger count. Based in Dallas, American has been a longtime leader in flying to South America. American merged with US Airways in 2013.
Delta: In 2008, Delta and Northwest Airlines were the first of the major U.S. carriers to merge, and their marriage is largely considered to have been well executed. The Atlanta-based company is a founding member of Skyteam and recently rocked the industry by acquiring a stake in the Latam Airlines Group.
Alaska Airlines: Primarily a domestic carrier, Seattle-based Alaska Airlines has long competed with United on West Coast routes. With its purchase of Virgin America in 2017, Alaska quickly acquired a much larger U.S. route network and fleet, which it continues to try to incorporate.
Southwest Airlines: Founded by Herb Kelleher, Dallas-based Southwest started flying in 1971 and is now considered the world’s largest low-cost carrier. Originally operating routes solely within Texas, Southwest’s network has grown to include the continental U.S., the Caribbean, Mexico and Central America, and Hawaii. Southwest also has a large presence in United-hub cities Denver, Chicago, and Houston.
UPDATE: Story was updated on December 5 to reflect the announcement of Scott Kirby’s promotion
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Photo Credit: United Airlines has been in operation for over nine decades and will fly to six continents at the end of 2019. Pictured is a United 737 taxiing at its Houston hub. United Airlines
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