A Giant No More......
The "Air Mail Scandal" of 1930 was, in a sense, a blessing for the pioneering companies that were part of the vast United conglomerate. At that time, it included airlines, aircraft and engine manufacturing companies, and several airports.
The word "scandal" was hurled by an overzealous media who accused then-Postmaster General Walter Folger Brown of master-minding a "spoils conference" in May 1930, to dispense favors to his airline cronies. Actually, Brown was a visionary who simply wanted a network of air mail contract routes served only by financially healthy airlines.
Bowing to media and political pressure, President Franklin Roosevelt in 1934 ordered Postmaster General James Farley to cancel all air mail contracts - - even while Congress was still investigating media charges of "collusion."
When the smoke cleared, United regained all of its air mail routes, but was forced to divest itself of its non-airline affiliates. The company also lost its president, Philip G. Johnson, who was barred from holding an airline position because of his participation in the Brown conference.
As an independent air transport corporation, United found itself with a new president named William Allan Patterson and a new freedom to make equipment decisions independent of the Boeing Airplane Company in Seattle, and the engine and parts manufacturers in the East.
United was free to establish its own course in commercial aviation.
Few things escaped the shadow cast by World War II, and United put aside its quest for growth and profitability and took on a new responsibility: serving the U.S. military. United modified warplanes for the armed forces, trained ground crews and flew thousands of missions to Alaska and across the Pacific to transport soldiers and supplies.
A Nation at War... "We have a long and most difficult fight ahead of us", United's President William A. Patterson told employees in a company memo issued December 9, 1941. Two days earlier, Japanese warplanes had attacked Pearl Harbor. By the next day, the U.S. Congress had declared war.
Soon, United employees who could be spared from their jobs were signing up for military duty. More than 1,500 of them - - from a variety of jobs throughout the company - - joined the armed forces.
Those who remained at their jobs became key players in a mammoth operation that gave full support to the U.S. war effort. It was a challenge United's people confronted with great courage and determination.
During the next 60 months, United trained more than 7,000 ground crew members for the U.S. Army and Navy air forces, and modified 5,736 bombers at its Cheyenne maintenance facility. The company also flew the equivalent of 7,000 flights across more than 50 million miles during its Alaska and Pacific airlifts. In all, United transported more than 156,000 military personnel, 8,600 tons of freight and 9,200 tons of mail during that period.
"It was," United's employee magazine reported, "the biggest, longest job tackled by United...and despite many difficulties, it was carried out in a manner which reflected nothing but highest credit to the company."
Historical book: The Age of Flight: A History of UAL
The post-war economic boom that swept the United States included a strong demand for air travel. President William A. Patterson responded by expanding United's workforce, acquiring new routes and purchasing United's first jet aircraft. This strategy solidified United's industry leadership and positioned it to become the world's largest commercial airline.
Peace, Prosperity and Progress... The end of World War II brought a brief period of euphoria to the war-weary people of the United States. Rationing was over, business and industry were back to a peacetime mode, and the nation was feeling the feverish excitement of the boom times economists had predicted.
But while the forecasters were correct in their predictions, none came close to foretelling the suddenness and intensity with which the boom would thrust itself upon the nation, particularly upon the air transport industry. Airline fares had been reduced 10 percent since 1941, making it cheaper in many cases to travel by air than by rail.
As FORTUNE magazine noted in its August 1946 issue, "Few airline executives came near guessing correctly the depth of the packed-down public demand for air travel."
The next decade saw United solidifying its base as it centralized control of daily operations out of its new operations hub in Denver. Aircraft maintenance also was centralized at a new high-tech, "push-button" facility in San Francisco.
With new fleets of state-of-the-art equipment, including the Douglas DC-6, Convair 340, Boeing 377 Stratocruiser and the Douglas DC-7 transports, United stretched its wings beyond the western boundary of the United States and launched service to Hawaii. United was grooming itself for even bigger things to come.
After leading United through 29 years of growth, President William A. Patterson moved into the chairman's office in 1963. United's new president, George Keck, continued the company's momentum by acquiring second-generation jetliners and seeking United's first trans-Pacific route beyond Hawaii. In late 1968, Keck also formed UAL, Inc., a holding company that would allow United to diversify.
New Technology, New Leadership... It was a decade of momentous changes. Between 1959 and 1969, United transitioned from the technology of propellers and reciprocating engines to the new science of jet propulsion. In the same period, the company established its undisputed position as the world's largest commercial airline when it merged with Capital Airlines, then the fifth largest air transport company in the United States. At the same time, United made its first serious attempts at globalization with the filing of extensive route applications to Asia. More than its aircraft and route developments, however, three other very significant events would change the course of future events at United:
* On Sept 26, 1963, George Keck was elected president of United and William Patterson was named chairman of the board and CEO. * UAL, Inc., incorporated December 30, 1968 as a holding company with United a wholly owned subsidiary. This action formally approved by stockholders at their annual meeting a few months later. * Before the decade ended, the Civil Aeronautics Board issued its devastating decision in the Transpacific Route Case, denying United's application for routes to Asia.
The next 20 years, dubbed a "turbulent era" by airline observers, would test the skills of United management as they had never been tested before.
United's fortunes changed in 1970 when the company posted a loss of $46 million just two years after making record profits. The company ran through a string of six presidents between 1970 and 1989, and changed its name twice as it continued its corporate expansion until forced to divest and return to its core airline business in 1987. It was a period of major hurdles for the airline's senior management team, which faced its biggest challenge when the industry was deregulated in 1978.
Winds of Change... In 1970, United posted a $46 million net loss, a massive turnaround from the $45 million profit it reported the previous year. What went wrong?
Airline observers cited various causes, including higher costs, lower fares and a flattened market. In addition, the Civil Aeronautics Board's Transpacific Route Case decision in mid-1969 cost United its bid for international routes and drained profits from the airline's lucrative U.S. Mainland-Hawaii operation. Finally, there was the premature introduction of the jumbo Boeing 747. But there were other causes, too, many of them internal.
Between 1970 and 1989, United made six changes in the office of the president, including the arrival of Western International Hotels executives Edward Carlson and Richard Ferris, who played significant roles in the acquisition and divestiture of United's principal subsidiaries during those two decades. In that period, also, UAL, Inc. changed its name twice -- Allegis Corporation in 1986, then to UAL Corporation in 1988.
With management changes came new directions and a new image. UAL, Corp. reached beyond the airline industry to acquire non-airline enterprises. United, itself, went beyond U.S. borders -- first, via new route authority to serve Tokyo from Seattle in 1983, and, two years later, through the purchase of Pan American Airways' Pacific Division.
To reflect its new direction, United changed its logo and aircraft livery and incorporated the design and color scheme in its employee uniforms, ground equipment and corporate signage. Before the turbulent era passed, United's parent company was forced by a major investor group to divest itself of its non-airline subsidiaries. UAL Corporation once again became involved exclusively in air transport operations.
In 1978, the U.S. Congress passed the Airline Deregulation Act and airlines were free to compete for passenger and freight business in an open market. Seven years later, the Civil Aeronautics Board went out of existence and air mail contracts - -the last regulatory domain of the CAB - - also were opened to free-market competition.
As the 20th century drew to a close, United redefined itself. Now operating in a deregulated environment, the company inaugurated service to Europe and South America and expanded its number of Pacific Rim destinations. United also adopted a new livery and logo befitting a global airline. Most important, United established its Employee Stock Ownership Plan, creating the world's largest majority employee-owned company in the world.
New Image for a New Airline......
As United entered the last decade of the 20th century, it took on an exciting, new image -- a growing, global airline. On Jan. 5, 1990, the company received U.S. government approval to serve Paris from Chicago and Washington, D.C., and, soon after, launched Newark-Tokyo service. By year's end, a series of bold moves left no question about United's plans for unparalleled expansion.
In just nine days in October 1990, the company placed the largest aircraft order in commercial aviation history -- $22 billion dollars -- and announced its purchase of Pan American's U.S. routes to London. At the same time, the U.S. government approved United's long-standing application to serve Tokyo from Chicago and granted an exemption to permit service to Madrid from Washington Dulles.
By the end of 1991, United was serving Amsterdam, Berlin, Madrid and Munich. In 1992, Caracas, Buenos Aires, Rio de Janeiro, Sao Paolo and other South American cities became United destinations. Stephen Wolf that year relinquished the airline presidency, remaining as chairman and CEO. Executive Vice President John Pope became president and chief operating officer.
The picture started to change in 1991 as fuel prices rose to record highs in the aftermath of the Persian Gulf crisis and a number of low-cost, no-frills carriers came on the competitive scene. UAL Corporation reported a record net loss of $332 million in 1991 and set a new, more dismal record in 1992: a net loss of $957 million.
United began 1993 by introducing a new gray, navy and red livery for its aircraft and new employee uniforms to project a more global image. But in response to the company's poor financial performance, senior management switched gears to a strategy of stringent cost containment. A hiring freeze, the grounding of older aircraft and the sale of 15 of United's flight kitchens contributed to a $400 million reduction in operating expenses that year, but it was not enough, according to management.
The company proposed a significant change in labor costs and began months of intense negotiations with employee unions. The negotiations produced agreements in mid-December with the Air Line Pilots Association and the International Association of Machinists. On Dec. 22, 1993, the UAL board approved a proposal for 54,000 employees to exchange portions of their salaries and benefits for UAL stock, paving the way for the creation on July 12, 1994, of the largest majority employee-owned company in the world.
As it flew toward the new millennium, United continued to lead commercial aviation. Shuttle by United, launched in 1994, competed successfully against a new wave of low-cost carriers. The Star Alliance global partnership United formed in 1997 with four international carriers continued to grow and expand United's reach. United focused on improving its service by developing a new Customer Satisfaction Philosophy for employees. For the first time since 1965, the company departed from its familiar "friendly skies" advertising slogan, replacing it with the word "'Rising."
Into the Next Millennium... The signs were clear as United prepared to enter the new millennium. With employee groups owning a majority share of the company's stock, the workers would theoretically have a voice in the direction of the airline.
On July 12, 1994, Stephen Wolf and two key officers of UAL Corporation, along with United Airlines President John Pope, stepped down from their positions. Also on that date, Gerald Greenwald was elected chairman and CEO of UAL Corporation and United; and John Edwardson was named airline president
One of Greenwald's first steps was to begin to transform the corporate culture from a "command-and-control" philosophy to one based on high employee involvement, with emphasis on communication. Workplace innovations were quickly adopted, including telecommuting, elimination of the furlough policy and introduction of casual dress codes in non-public areas of the company.
On July 25, 1994, a historic move was made by United's stockholders. For the first time in the airline's history, representatives from the International Association of Machinists and the Air Line Pilots Association were added to the board of directors. Salaried and management employees also selected an outside director to sit on the board. Over the next two years, the original 54,000 U.S. employees who launched the ESOP in mid-1994 were joined in ownership by many of their co-workers in Europe, South America and Asia.
Meanwhile, United continued to grow. In October 1994, "Shuttle by United" was established as an "airline within the airline, to operate low-cost, no-frills flights on the U.S. West Coast. In 1995, United inaugurated mainline service to New Delhi, India. The route was the final link needed to establish the company's "'Round the World" service and make United a truly global airline.
In May 1997, United partnered with Air Canada, Lufthansa, SAS and Thai Airways to create Star Alliance: the airline network for Earth. Varig joined the alliance in October.
On September 11th, 2001, two UAL jets were hijacked. Both aircraft crashed with all aboard being killed.