Case 02
Gordon Bethune and the complete transformation of Continental Airlines
Overview
When Gordon Bethune left his job at Boeing in February 1994 to accept the position of chief operating officer (COO) of Continental Airlines, the company was struggling to survive. Even though it was the fifth largest commercial airline in the United States, with revenues of nearly 6 billion dollars, the company had reported a net loss every year since 1985, and was ranked the last among the top ten commercial airlines in the United States in terms of operational performance and customer satisfaction-Continental was the last among the ten largest airlines in the United States in punctuality of arrivals, had the highest number of reports of
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the organization itself was so dysfunctional it could not implement the best idea in the world.
To turn around what was happening in Continental, Bethune developed what later became known as the "Plan for Progress." It consisted of four parts-a marketing plan to fly on more profitable routes, a financial plan to achieve the company reach the black in 1995, a plan to improve product offerings for customers Continental, and a staffing plan for transform the culture of the company. The four parts should be implemented simultaneously and together.
The case highlights the details of the "Plan for Progress" and the series of administrative measures that were implemented over the next six years to implement and run. Bethune 's effort to achieve the turning of the company became a classic.
In January 2001, Continental Airlines was named "Airline of the Year" by Air Transport World, a leading magazine in the trade industry of aviation. The magazine cited the friendly culture for employees of Continental, and reported that the company had the best working relationship between the major transportation agencies with connections to several cities. Continental also stated that he had a "superior passenger service," especially when it came to business travelers.
In 2000 and 2001, Continental was named the second most admired airline in the United States by Fortune magazine, followed by Southwest Airlines both years, and was named by the magazine as
Business Strategy – BAD 4013 – SUMMER 1999 Case Study Southwest Airlines I. Strategic Profile and Case Analysis Purpose The mission of Southwest Airlines is dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit. Twenty-seven years ago, Rolling King, owner of floundering commuter airline, and Herb Kelleher, King’s lawyer, got together and decided to start a different kind of airline that would provide a short-haul, low-fair, high-frequency, point-to-point service in the United States. The company began service on June 18, 1971 with flights between Dallas, Houston, and San Antonio (“The Golden Triangle” as Herb called it). Southwest Airlines is the fourth
Southwest Airlines is based in Dallas and founded in 1971. They are known for their higher airfares and good customer services. (Elliot) The employees are known to be social with the travelers. They often times make changes and waive airline requirements. (Elliot) For example: “Robert Siegel and his wife scheduled a
While Frontier and Delta are both popular choices of airlines for Americans, Delta has become more of a household name because of their friendlier service, more comfortable cabins, and their limited extras fees. Frontier airline still is a worthy competitor by being cheaper, but they also have many added on fees for things that are free with Delta. Overall, Delta knows how to take better care of their customers and make sure everyone is satisfied.
In order to determine whether the Five Forces are still applicable, this part will analyse Industry in general concerning structural changes due to Digitalization. Because of Digitalization, another two forces significantly affect the competition which are Globalization and Deregulation. The impact of Globalization on the Industry structure is the customers gain benefit as comparing global prices become much easier and faster in from the Globalization process (Dalken, 2014).
United Airlines and Continental Airlines, two major airlines companies, agreed to a merger that would create the world’s largest airline. Such important deal has a lot of problems to be dealt with, from technical, for example how to put the companies databases together, to more fundamental, like how the company should be ruled.
State what occurred in the case regarding Kotter’s steps 3 and 4 of developing a vision and strategy and communicating the change vision (two to three paragraphs).
Independence Air products coupled with their customer focus proved very popular and earned them second position in customer satisfaction among 16 domestic airlines in the nationally recognized Market Matrix Hospitality Index. This was the first time Independence Air was listed in the Airline Customer Satisfaction survey. (Source; Independence Air).
Continental Airlines has been experiencing turbulent times in recent quarters and without material changes to the company’s operations it may have worse times ahead. Using the results from my regression analysis, as well as cost estimation, I have forecasted what Continental can expect for revenue, costs, and profit in 2009. Table 2 is shown below, which shows the financial summary of Continental Airlines, based on reduced flight capacity and the projections I have been provided with.
In 2008, the senior management team at Continental Airlines, commanded by Lawrence Kellner, the Chairman and Chief Executive Officer, convened a special meeting to discuss the firm’s latest quarterly financial results. A bleak situation lay before them. Continental had incurred an operating loss of $71 million dollars—its second consecutive quarterly earnings decline that year. Likewise, passenger volume was significantly down, dropping by nearly 5 percent from the prior year’s quarter. Continental’s senior management needed to act swiftly to reverse this trend and return to profitability.
Through this plan the management has increased productivity, creativity, quality and innovation in the company. Boeing has companywide diversification
hundred companies to work for. Fortune has hailed Southwest as the most successful airline in
Southwest Airlines is known as one of the most caring and considerate companies. Since 1971, Southwest Airlines has prided itself in their exemplary customer satisfaction and family like approach to customers. American Airlines excels in many areas, but the ones that will be discussed are emotional intelligence, and cultural organization. More often than not, developing these areas are easier said than done.
As with all airlines, Delta’s recent performance has been significantly impacted by industry shifts and external events. Terrorist attacks and escalating costs have significantly impacted Delta’s profitability in recent history (Rivkin 4). The company has also been losing valuable market share to the low-cost carrier Southwest Airlines throughout the southeast and specifically in the lucrative Florida market (Rivkin 8). JetBlue also began encroaching on key Delta routes, and this seems only likely to increase (Rivkin 9). Despite this, Delta has still performed better than any other legacy carrier (Rivkin 8). Still, recent history has brought several changes to this legacy carrier, and the company has turned its attention towards new competitive strategies.
This memo contains a lease analysis of the case titled: Continental Airlines, Inc - Leases. All numbers contained in this memo are in millions.
Once in charge of the struggling airline, Bethune eliminated more than 7,000 jobs, dismissed fifty vice presidents and replaced them with twenty new managers, and outsourced much of the carrier’s maintenance work. The thrust of this reorientation embodied Bethune’s efforts and goals to improve company service while abolishing cut-rate fares and cost-based practices. In addition to these explicit streamlining actions, Bethune also changed several practices that had significant symbolic value in the refocusing effort at Continental. For example, surveillance cameras were removed from executive offices, and the cockpits of planes were scheduled to be cleaned every thirty rather than every ninety days.