Continental Company Analysis and Generation of New Solutions


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  • Continental serves more international destinations than any other U.S. carrier, and also has the most destinations in Japan for a U.S. carrier. *New, nonstop service from Newark to Munich began March 27, 2010.* This is the 30th destination in Continental’s trans-Atlantic network.
  • Both have agreed that Continental’s CEO Jeff Smisek will head the combine airline.Disagreements have emerged over which stock price to use
  • Continental Company Analysis and Generation of New Solutions

    1. 1. Continental airlines<br />Jacopo Butti<br />Tamara DeAngelis<br />Jillean Cooper<br />Joshua Moran<br />James Spurlock<br />“Work hard, Fly Right”<br />
    2. 2. Company History<br />1934, when Continental was operating under the name Varney Speed Lines<br />July 1937 R. Six change the name with Continental Airlines and moved the HQ to Denver, CO<br />In the 40’s and 50’s with the participation in WWII grew profits and the fleets of aircrafts<br />End of 50s it started to operate other routes, like Chicago and Los Angeles, plus it was operating 7 days a week<br />Early 60s Continental HQ moved to Los Angeles and provided air transportation for the US Military troops in Vietnam. <br />Deregulation act of 1978 allowed the carriers to expand their routes systems and developing new pricing structures.<br />80s lead to an expansion in S. America, Asia and Australia and had a fleet of over 100 aircrafts.<br />1983, Continental filed bankruptcy with losses of $218,000,000. <br />1990, due to high rise of fuel costs and Kuwait invasion Continental filed for bankruptcy again.<br />1993 the company purchased 90 new Boeing aircraft with the investments by Air Canada and Air Partners.<br />1995 Initiation of the campaign “Go Forward Plan.” <br />
    3. 3. Quick Facts<br />Star Alliance Members<br />Mission statement: To be recognized as the best airline industry in the industry by our customers, employees and shareholders<br />Continental Airlines joined Star Alliance on Oct. 27, 2009<br />Worlds Largest global airline alliance<br />No. 1 Greenest U.S. Airline (2009)<br />Most fuel-efficient major U.S. network carrier<br />Best Executive/Business Class (2009, 2003-07)<br /><ul><li>Serves more international destinations than any other U.S. carrier with 270 destinations worldwide.</li></li></ul><li>Strategy<br />Corporate Level Strategy:<br />Focus on the business traveler niche market<br />Focus on International flights<br />Expanding operations by gaining access to more destinations worldwide (mergers)<br />High commitment to customer service<br />Award winning Cargo Service<br />Business Level Strategy:<br />To compete in a low-cost environment by differentiation in the international flights sector<br />Functional Level Strategy: <br />Extra seat room upgrades in economy class cabin<br />Better variety in high quality, healthy foods in-flight (for purchase)<br />Mobile boarding passes (paperless; use a PDA device)<br />
    4. 4. OrganizationalChart<br />Jeffrey Smisek<br />Chairman, President and CEO<br />Jim Compton<br />Executive Vice President and CMO<br />Mark Moran<br />Executive Vice President and COO<br />Zane Rowe<br />Executive Vice President and CFO<br />Dave Hilfman<br />Senior VP-Worldwide Sales<br />Mark Bergsurd<br />Senior VP-Marketing<br />Programs and Distribution<br />Ron Anderson-Lehman Senior<br />VP and CIO<br />Mike Bonds<br />Senior VP-HumanResources<br />And Labor Relations<br />Gerals Laderman<br />Senior VP-Finance and Treasurer<br />Mark Erwin<br />Senior VP-Corporate<br />Development and Alliances<br />Leon Kinloch<br />Senior VP-Pricing and Revenue Management<br />Holden Shannon<br />Senior VP-System Operations and Real Estate<br />Bill Meehan<br />Senior VP-Airport Services<br />Jaques Lapointe<br />Senior VP-Procurement<br />Jennifer Vogel<br />Senior VP, General Counsel, Secretary and Chief Compliance Officer<br />
    5. 5. Financial Analysis<br />
    6. 6. SWOT Analysis<br />Strengths<br />Weaknesses<br />High Commitment to customer service<br />Fortune Magazine’s No. 1 most admired global airline<br />Flexible Fleet Plan<br />70% of their fleet consists of common rated Boeing 737 aircraft<br />“Go-Forward Plan”<br />Well-defined target market: services to upper-class and business travelers<br />BusinessFirst cabin service<br />Serves more international destinations than any other U.S. carrier<br />Teamsters won election to represent Continental Airlines ground workers. <br />Shifts negotiating power away from management to the ground workers and limits their “lee-way” in cost costing. <br />High interest expense<br />Due to the amount of debt they have contributed to the company regularly operating at a loss. 2009-$72 million loss before income taxes<br />Removal of all Boeing 737-300 and 737-500 aircraft<br />High cost of retiring airplanes<br />
    7. 7. SWOT Analysis<br />Threats<br />Opportunities<br />Growth in flights to China<br />Continental is the largest U.S. carrier to service Japan<br />Proposed merger with United<br />Networks of Continental and United are complementary. News reports say an agreement may be finalized Monday<br />Continental will be the first U.S. carrier to fly the new Boeing 787<br />New features: bigger windows, superior cabin air, more stowage space, advanced lighting and new in-flight entertainment systems<br />More fuel efficient than the B737<br />Food For Purchase<br />Lower in flight costs<br />Current economic conditions<br />Nearly impossible to achieve capacity growth<br />Demand for air travel is not growing<br />Business travel budgets were slashed by as much as 20% - 40%<br />Delay in delivery of new Boeing 787s<br />Causes the cost-savings in fuel to be delayed. Delay of aircraft delivery damages Continental’s long-term planning<br />Increase in federal and airport taxes<br />Due to heightened security measures, i.e., the implementation of full-body scanners<br />Technology<br />Enables companies to hold conferences and meetings without travel<br />
    8. 8. Porters 5 Forces<br />The entry barriers in the airline industry are high:<br />Airport and government regulations<br />High capital for entering the market<br />The supplier power is that it is high:<br />Few suppliers support the large number of established airlines<br />High switching costs in changing supplier<br />The buyer power is medium/high:<br />Carriers compete on low price the consumer retain some power in the purchase process<br />Business consumers seek for the brand that they are loyal to, so they are willing to pay any price <br />Existing rivalry is high:<br />The industry is cyclical<br />High exit costs<br />Threat of substitutes is high:<br />For short distances, airplanes will be substitute with automobiles<br />Numerous macroeconomic variables:<br />There is a strong correlation between the U.S. GDP and the growth of the airline industry on a year bases. <br />Adaptation to raise in fuel costs, that already led Continental to a bankruptcy in 1990<br />
    9. 9. Recommendations<br />What<br />How<br />Reduce the number of brand names advertise under<br />Revise marketing campaign<br />Take advantage of major presence in Japan and expand into China & India<br />Realize the cost synergies of a merger<br />Improve productivity for in-flight cost<br />Cut marketing costs; increase brand awareness to provide a more cohesive image<br />Focus on comfort and reliability<br />New leases/landing rights<br />Successfully merge with United<br />Utilize B787s and charge for meals<br />
    10. 10. THANK YOU for Flying with Us Today!<br />