United Airlines celebrating 85 years in flight

April 6, 2011 2:51:37 PM PDT
From rising fuel prices to a mega-merger, Chicago's hometown airline is in the midst of massive change and challenges.

Wednesday, United marked 85 years as an airline. ABC7'S Ben Bradley talked one-on-one with the top executive at United about these issues and more.

When United began flying under a different name back in 1926, only 6,000 Americans traveled by plane. Contrast that with now: 150 million people a year fly the "new" United alone. It is an airline that's just now beginning to emerge from one of its most turbulent times.

"This a tough business, and making it 85 years is an amazing feat," said United Airlines CEO Jeff Smisek.

Wednesday, Smisek celebrated an accomplishment that a few years ago seemed in jeopardy. United was in bankruptcy, its employees in revolt. Today, thanks to its tie-up with Continental, United is the world's largest airline and Chicago remains its home.

"We've got great hubs, great gateways," said Smisek. "We've got great technology, and most of all, we've got great co-workers."

The new United employs 86,000 people around the world, 12,000 in Chicago. Many have wondered how the merger may affect their jobs.

Specific details about cuts are expected to come in the next few months.

"The rank-and-file employees are largely unaffected," said Smisek. "The only co-workers that are affected by the merger, per se, are at headquarters and people understand that. There's only one CFO, only one general counsel and things like that."

The airline's health is better than before. Last quarter, the combined carriers posted a profit that beat Wall Street expectations, but only when the merger costs were taken out of the equation.

The big variable for any carrier: The price they have to pay for fuel. It represents 40 percent of United's overall costs.

"Our goal is to make money, no matter what the fuel price is," said Smisek. "We need to learn to make money no matter what the fuel price is, and we'll make the appropriate adjustments in fares and capacity so we can make money. We need to, because we're really important to the global economy, the US economy, and we're certainly important to the city of Chicago."

What that means for customers is, as long as fuel prices remain high, United and other carriers either have to pass that cost along to customers or cut capacity. United has already dropped plans to grow its network this year.

As for the merger: By the end of the summer, customers will be able to seamlessly check-in in the same spot for a United or Continental flight.

The airlines' frequent flyer programs merge early next year. That's when the Continental name goes away for good.