United Airlines A Victim Of 9 11
Submitted by oralskills03 on 06/30/2008 05:21 PM
- Category: Business
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United Airlines A Victim Of 9 11
United Airlines – A Victim of 9/11?
Since the brothers Montgolfiere lifted up in a hot air balloon, the fascination of flying grasped a lot of people. Today, hundreds of airlines with thousands of aircrafts compete about millions of passengers. Obviously, this is a lucrative market, but the events on September 11, 2001 precipitated the whole airline industry into a deep crisis. Until now, several airlines announced insolvency among them United Airlines. Although it is the second largest carrier in the world, the management filed for chapter 11 federal bankruptcy protection on December 10, 2002. Is 9/11 the reason for this insolvency or are there others?
As the events on 9/11 took place, two of the four hijacked planes were owned by United Airlines. But the following figures of cancelled flights and reduced bookings hit UAL harder than the tragic loss of the two aircrafts with their passengers and crews. Additional to the current losses of $ 541 M of the first half, UAL showed a total loss of $ 2.1 billion in 2001. Due to the loss in turnover and intensely risen charges for security UAL was on the way down. In September 2001 the stock price dropped from about $ 35 to nearly $ 12. From this shock UAL did not recover and the stock price continued its fall to $ 1 in December 2002.
But there are more reasons for the bankruptcy of UAL. Through the years, UAL had to face a lot of crises, e.g. the governmental cut-off of the high profit gaining US-Mainland – Hawaii route, which led from a total profit of $ 45 M in 1969 to a total loss of $ 70 M in 1970. The deregulation of the airline industry 1978 seduced UAL to expand beyond their means.
Therefore, losses rose up to $ 957 M in 1992 and UAL was forced to act. UAL disencumbered themselves by giving 53% of their shares to the employees. From this day forth the unions had to much influence on wages. Furthermore, UAL had the highest costs for aircrafts, wages and surveillance in the...
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