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History

United Airlines traces its claim to be the oldest commercial airline in the United States to the Varney Air Lines air mail service of Walter Varney, who also founded Continental Airlines. It was founded in Boise, Idaho. Varney's chief pilot, Leon "Lee" Cuddeback, flew the first Contract Air Mail flight in a Swallow biplane from Varney's headquarters in Boise, Idaho, to the railroad mail hub at Pasco, Washington, on April 5, 1926 and returned the following day with 200 pounds of mail. April 6, 1926 is regarded in the United Airlines company history as both its own birthday and the date on which "true" airline service—operating on fixed routes and fixed schedules—began in the United States. Varney Airlines' original 1925 hangar served as a portion of the terminal building for the Boise Airport until 2003, when the structure was replaced.

In 1927, airplane pioneer William Boeing founded his own airline, Boeing Air Transport, and began buying other airmail carriers, including Varney's. Within four years, Boeing's holdings grew to include airlines, airplane and parts manufacturing companies, and several airports. In 1929, Boeing merged his company with Pratt & Whitney to form United Aircraft and Transport Corporation (UATC). In March 1928, Boeing Air Transport, National Air Transport, Varney Airlines and Pacific Air Transport combine as United Air Lines, providing coast-to-coast passenger service and mail service. It took 27 hours to fly the route, one way.

In 1930, as the capacity of airplanes proved sufficient to carry not only mail but also passengers, Boeing Air Transport hired a registered nurse, Ellen Church, to assist passengers. United claims Church as the first airline stewardess. On May 7, 1930, UATC completed the acquisition of National Air Transport Inc, a large carrier based in Chicago. On March 28, 1931, UATC formed the corporation United Air Lines, Inc. to manage its airline subsidiaries.

Following the Air Mail scandal of 1930, the Air Mail Act of 1934 banned the common ownership of manufacturers and airlines. UATC's President Philip G. Johnson was forced to resign and moved to Trans-Canada Airlines, the future Air Canada. UATC was broken into three separate companies. UATC's manufacturing interests east of the Mississippi River became United Aircraft (the future United Technologies), while its manufacturing interests west of the Mississippi became Boeing Airplane Company. The airline interests became United Air Lines. The airline company's new president, hired to make a fresh start as airmail contracts were re-awarded in 1934, was William A. Patterson, who remained as president of United Airlines until 1963.

United's early route system, formed by connecting air mail routes, operated east-to-west from New York City via Chicago and Salt Lake City to San Francisco, as well as north-south along the West Coast. The early connections during this era became the basis of major United hubs in Chicago and San Francisco, followed later by Denver and Washington, D.C. These four cities remain United's principal hubs.
United introduced the Boeing 247 in 1933; for the first time passengers could fly across the US without an overnight stop or changing planes. That summer the fastest flight left Newark at noon (probably EST) and arrived San Francisco at 0655 PST after eight stops; fare was $160 one-way.

On the night of October 11, 1933 a United Boeing 247 exploded in mid-air and crashed near Chesterton, Indiana, killing the seven people aboard. Investigation revealed that the explosion was caused by a nitroglycerin bomb placed in the baggage hold. The United Airlines Chesterton Crash is believed to be the first proven case of air sabotage in commercial aviation history. No suspects or motives were ever discovered.
During World War II United-trained ground crews modified airplanes for use as bombers, and transported mail, material, and passengers in support of the war effort. Post-war United benefited from both the wartime development of new airplane technologies (like the pressurized cabin which permitted planes to fly above the weather) and a boom in customer demand for air travel. This was also the period in which Pan American Airways established a Tokyo hub and revived its Pacific route system that would later be acquired by United.
In 1954 United Airlines became the first airline to purchase modern flight simulators which had visual, sound and motion cues for training pilots. Purchased for US$3 million (1954) from Curtiss-Wright, these were the first of today's modern flight simulators for training of commercial passenger aircraft pilots.
On November 1, 1955 United Airlines Flight 629, which was flying from Stapleton Airport in Denver to Portland, Oregon, was bombed, killing all 39 passengers and five crew members on board the Douglas DC-6B aircraft. The bomb was planted by Jack Graham who placed the device in his mother's luggage with the intent of collecting on her life insurance policy. Graham was arrested, tried, and was executed a year after the explosion.

In the late 1950s, United renewed its fleet with newer aircraft, such as the Douglas DC-7 propliner and later the Douglas DC-8 jetliner, the latter of which United was the launch customer along with Delta Air Lines. However, during this time period, several of these new aircraft were destroyed in a series of mid-air collisions that killed everyone on board both planes involved. The first loss was Flight 718, which struck a Trans World Airlines Lockheed L-1049 Super Constellation over the Grand Canyon in Arizona on June 30, 1956. Less than two years later, Flight 736 crashed in southern Nevada after colliding with a USAF fighter jet. On December 16, 1960, Flight 826 hit another TWA Super Constellation over New York City. These accidents helped pave the way for modern Air Traffic Control.
United merged with Capital Airlines on June 1, 1961 and displaced American as the world's second largest airline, after Aeroflot. In 1968 the company reorganized, creating UAL Corporation, with United Airlines as a wholly owned subsidiary.
United Airlines took delivery of their first Boeing 747s in August 1970, initially operating the new aircraft type on their transcontinental routes within the United States. This was the first wide-body design to serve the airline.
United Airlines is the only commercial airline to have operated Executive One, the designation given to a civilian flight carrying the U.S. President. On December 23, 1973 then President Richard Nixon flew as a passenger aboard a United DC-10 flight from Washington Dulles to Los Angeles. White House staff explained that this was done to conserve fuel by not having to fly the usual Boeing 707 Air Force aircraft. In keeping with the practice of having two aircraft available at all times during Presidential travel, an Air Force aircraft flew behind in case of emergency.

De-regulation

United sought overseas routes in the 1960s but the Transpacific Route Case (1969) denied them this expansion; it did not gain an overseas route until 1983 when they began flights to Tokyo from Portland and Seattle. United became a proponent of deregulation due to its perception that regulation, as it then existed, was a major constraint on United's ability to profitably grow. After years of focused work to bring about deregulation, the 1978 Airline Deregulation Act became law.

In 1985 United agreed to buy the ailing Pan American World Airways entire Pacific Division, Boeing 747SPs, and L-1011-500s, and flight crew staffs for $750 million. By the end of 1986 United flew to 13 Pacific destinations, most of which were purchased from Pan Am.

Economic turmoil during the 1970s which led to "stagflation", labor unrest, and the pressures of the 1978 Airline Deregulation Act greatly hampered the industry and United, which incurred losses at a time when it was also undergoing changes at the top of both United Airlines and its parent company UAL Corp. Some changes due largely to the retirement of long term senior management members as well as performance driven changes at the very top in 1969 and again in 1985 following the pilot strike.

In May 1981, one week after rival American Airlines launched AAdvantage, the first modern frequent flyer program, United launched its Mileage Plus.
In 1982 United was the launch carrier for the Boeing 767, receiving its first 767-200s on August 19.
In 1984 United was the first airline to serve all 50 states when it started flights to Atlanta, Nashville, Memphis, Little Rock, Fargo, Casper, Jackson, and Charleston.

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Strike of 1985

On May 17, 1985, United's pilots went on a 29-day strike claiming the CEO, Richard Ferris, was trying to "break the unions." They used management's proposed "B-scale" pilot pay rates as proof.  American Airlines already had a non-merging B-scale for its pilots. Ferris insisted United had to have pilot costs no higher than American's, so he offered United pilots a "word-for-word" contract to match American's, or the same bottom line numbers. The United ALPA-MEC rejected that offer. The only choice left, to achieve parity with American's pilot costs, was to begin a B-scale for United's new-hire pilots.

Ferris wanted that B-scale to merge in the captain's ranks, which was more generous than American's B-scale, that never merged at all. But, the ALPA MEC insisted they merge in the new pilot's sixth-year with the airline. In the final hours before the strike, nearly all issues had been resolved, except for the time length of the B-scale. It appeared that would be resolved too as negotiations continued. ALPA negotiators delivered a new counter-proposal at 12:20 am in an effort to avoid the strike. However, MEC Chairman Roger Hall, who was hosting a national teleconference from the Odeum (a convention center in the Chicago suburbs) with F. Lee Bailey, declared the strike was on at 12:01 am, on May 17, without further consulting the negotiators, some of whom believed they could find agreement on all contract terms, if the negotiations were allowed to continue. Moments before the ALPA announced strike deadline, they began a "countdown of the final 30 seconds from Chicago" (the Odeum teleconference). Doing that made it impossible to extend the strike deadline, so that the final issues could be resolved without a strike.
Mr. Ferris changed United's parent company's name from UAL Corporation to Allegis in February 1987 but the name change was short lived. Following Ferris' termination by the board, Allegis divested its non-airline properties in 1987 and reverted to the name UAL Corp. in May 1988.

The decline of Pan American World Airways offered opportunities; in 1991 United purchased Pan Am's routes to London Heathrow Airport. In direct negotiations with the UK government United also obtained rights to fly to Heathrow from Chicago. However, the aftermath of the Gulf War and competition from low-cost carriers led to losses of USD $332M in 1991 and USD $957M in 1992. In 1992 United purchased now-defunct Pan Am's Latin American and Caribbean routes and Miami gates, but United allowed months to elapse between Pan Am's demise and its launch of service.
In 1994 United's pilots, machinists, bag handlers and non-contract employees agreed to acquire 55% of company stock in exchange for 15% to 25% salary concessions. The flight attendants voted to not participate in the deal, and at the beginning some wore buttons saying "we just work here." The Employee Stock Ownership Plan (ESOP) made United the largest employee-owned corporation in the world. United used the opportunity to create a low-cost subsidiary, Shuttle by United, in an attempt to compete with low-cost carriers.
United used its employee-ownership in its marketing communications, with slogans such as "the employee-owners of United invite you to come fly the friendly skies," "we don't just work here," and "thank you for calling United Airlines; please hold and one of our owner-representatives will be with you shortly."
The financial outcomes of the ESOP were decidedly uneven for different players. As part of ESOP agreement, United CEO Stephen Wolf resigned and took a consulting job with Lazard Freres, the very investment company he had hired to advise United's board during the ESOP buyout process. Stewart Oran, the key legal advisor to the pilots' union, received a $5.5 million package to join the management of the new employee-owned company as legal counsel after the ESOP was formed.United's unions, having larger voice in running the company, later successfully bargained for significant pay increases, but the effect was only short-term. The rank and file employees were locked into their stock, which got wiped out in the eventual bankruptcy. It was around this period (in 1993) that United introduced its grey and blue color scheme. It had been criticized that the color scheme blended with the darkness during nighttime operations.

Turn-of-the-21st-century developments
In 1997, United co-founded the Star Alliance with Air Canada, Lufthansa, Scandinavian Airlines and Thai Airways. That same year, United opened a major hub at Los Angeles International Airport.

United planes parked at San Francisco International Airport, one of its main hubs. United is also one of the founding members of Star Alliance.
United was the launch customer of the Boeing 777 and had significant input on its design. It was also the first airline to introduce the twin-jet in commercial service.
In 1998, Delta Air Lines and United introduced a marketing partnership that included a reciprocal redemption agreement between SkyMiles and Mileage Plus programs and shared lounges. This scheme allowed members of either frequent flier program to earn miles on both carriers and utilize both carriers' lounges. Delta and United attempted to form an even cozier codeshare relationship, but this deal was effectively killed by ALPA. The marketing partnership ended in divorce in 2003, but paved the way for a future alliance with US Airways.
In May 2000, United announced plans to acquire competitor US Airways in a complex deal valued at $11.6 billion. The offer drew immediate scorn from consumer groups and employees of both airlines. By the following year, regulatory sentiment was against the deal, and United withdrew the offer just before the Department of Justice barred the merger on antitrust grounds in July. The two airlines subsequently formed an amicable partnership that led to US Airways' entrance into the Star Alliance.
May 2000 also saw a bitter contract dispute between United and its pilots' union. The pilots wanted their pay restored to the levels that existed prior to the pay cuts and concessions that were taken to fund the ESOP. Planning for the busy summer season, United had counted on its pilots flying overtime. However, the pilots could not be forced to work overtime, and most pilots refused to fly the extra hours. Although United knew they would have to cancel numerous flights if this were to happen, they did not hire new pilots to make up for the potential shortage. Over the summer, United had to cancel a large portion of its schedule at its major hubs. Eventually, CEO Jim Goodwin and the rest of the management had to get the pilots back in the cockpits and quickly offered the pilots a 48% increase over four years with up to 28% upfront.

September 11, 2001
As part of the September 11, 2001 terrorist attacks, two United Airlines planes were hijacked by terrorists affiliated with al-Qaeda. One aircraft was N612UA, a Boeing 767–222 (Flight 175) that crashed into the South Tower of the World Trade Center in New York City and the other was N591UA, a Boeing 757–222 (Flight 93) that crashed in rural Pennsylvania. Flight 93 was suspected to have been directed towards the United States Capitol building according to the United States Department of Homeland Security.

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Bankruptcy and reorganization

Airbus A320-200 landing at Norman Y. Mineta San Jose International Airport.
With a strong presence on the West coast, United benefited from the dot-com boom which boosted traffic (especially premium traffic) to the San Francisco hub. This increase was only temporary and when the bubble finally burst, United was in a worse position than before because it had failed to keep costs under control, possibly due to giving its pilots pay raises of up to 28% in the summer of 2000.[28] Coupled with a battered network, the September 11 attacks and skyrocketing oil prices, the company lost $2.14 billion in 2001 on revenues of $16.14 billion. In the same year United applied for a $1.5 billion loan guarantee from the federal Air Transportation Stabilization Board established in the wake of the September 11 attacks. When the IAM union failed to approve the loan guarantee—while all other unions approved it—the application was rejected in late 2002 and the company was forced to seek debtor-in-possession financing from commercial sources to cover the expected future losses. United made several attempts to obtain the government loans, even enlisting several congressmen and senators for help. The government rejected the application claiming United "could probably obtain the $2 billion in financing it needs to emerge from protection without a federal loan guarantee".
Unable to secure additional capital, UAL Corporation filed for chapter 11 bankruptcy protection in December 2002. The ESOP was terminated, although by then its shares had become virtually worthless. Blame for the bankruptcy has fallen on the events of September 11, which triggered financial crisis in all the major North American airlines, coupled with the economic slowdown that was underway.
United continued operations during its bankruptcy, but was forced to cut its costs drastically. Tens of thousands of workers were furloughed, and all city ticket offices in the US closed. The airline canceled several existing and planned routes, and eliminated its entire Latin American gateway and flight crew base at Miami International Airport after March 1, 2004. Furthermore, they reduced their mainline fleet from 557 (before 9/11) to 460 aircraft.

At the same time, the airline continued to invest in new projects. On November 12, 2003, it launched a new low-cost carrier, Ted, to compete with other low-cost airlines. In 2004 it launched its luxury "p.s." (for "premium service") service on re-configured 757s from JFK Airport in New York City to Los Angeles and San Francisco. The service was targeted to business customers and high-end leisure customers in the coast-to-coast market. In February 2004, the airline introduced the new Blue and White livery with the Blue Tulip on the tail to coincide with a new advertising campaign.
Financial pressure on the airline was heavy. The SARS epidemic in 2003 depressed traffic on United's extensive Pacific network. The soaring cost of jet fuel ate away remaining profits United made. United implemented several fare hikes on overseas routes, citing rising fuel costs, in 2004 and 2005. Two days after its triumphant first flight to Vietnam, United announced that it would cut U.S. flight capacity by 14% after the holidays and add more international flights, which were more profitable.

United took advantage of its Chapter 11 status to negotiate hard-to-cut costs with employees, suppliers, and contractors, including cancellation of feeder contracts with United Express carriers Atlantic Coast Airlines (which became Independence Air) and Air Wisconsin (which became a US Airways Express carrier).
Most controversial of all, however, was the 2005 cancellation of its pension plan, the largest such default in U.S. corporate history. It renegotiated its contracts with the pilots' and mechanics' unions and the Association of Flight Attendants for lower pay. Criticism was also leveled at the CEO, Glenn Tilton, for demanding pay cuts from employees while receiving the highest salary of any major U.S. airline CEO.
Originally slated to exit bankruptcy protection after 2½ years in the third quarter of 2005, United requested yet another extension in light of record-high fuel prices. On August 26, 2005, the bankruptcy court extended the airline's exclusive right to file a reorganization plan to November 1, although it also stated firmly this extension would be the last. United announced at the same time it had raised $3 billion in exit financing and filed its Plan of Reorganization, as announced, on September 7, 2005.
The bankruptcy court approved the restructuring plan on January 20, 2006, clearing the way for United to exit bankruptcy on February 1, 2006, and finally return to normal operations.

Beyond Chapter 11

On December 9, 2004, the airline made history when UA869 (747–400) landed at Ho Chi Minh City (formerly Saigon), Vietnam. The scheduled flight from San Francisco via Hong Kong (SFO–HKG–SGN) was the first by a U.S. airline since the end of the Vietnam War, when Pan Am halted service shortly before the fall of Saigon in 1975.
United's management called for consolidation in the industry and looked for a suitor in 2006. The Wall Street Journal revealed in late 2006, that Continental Airlines was in merger discussions with United. A deal was not "certain or imminent," with the talks being in a preliminary state. In the interim, it increased its ties with British carrier BMI and Aloha Airlines. In April 2007, United and British carrier BMI announced that they would 'effectively merge their trans-Atlantic operations'.[35][36] The merged operations would have begun in March 2008, however Lufthansa’s takeover of BMI preempted the two carrier’s plans when BMI’s transatlantic flights were terminated. United’s May 2007 acquisition of an equity stake in its longtime partner Aloha Airlines was short-lived as Aloha ceased operations in March 2008. On June 14, 2007, CFO Jake Brace said his company is still looking to tie the knot with a suitable merger partner.

In the years following United’s exit from bankruptcy, two large financial firms, Bank of America and Fidelity Investments, accumulated shares to become the second largest owner with an 11 percent stake in the company.[39] As mentioned earlier, the industry environment was ripe with pressures to merge and consolidate. Pardus Capital Management LP, a hedge fund that owned 7 million shares of Delta and 5.6 million shares of United, called for the two carriers to merge. This action sent shares of both airlines up but this was short-lived and became moot because Delta wedded Northwest.
The surge in jet fuel prices caused disruption to United’s impending start of non-stop long-haul services. Though the FAA had already awarded the SFO to Guangzhou, China to United, they postponed the launch citing high fuel prices. Other long-haul city pairs, such as its 2009 application to fly between Los Angeles and Shanghai (which began May 2011) were denied by the FAA.
During this time of turmoil brought on by external forces, United explored options to reestablish its financial footing and raise capital.

      These changes included:
               Divesting of the Maintenance, Repair and Overhaul operations at SFO.
               Spinning off the cargo division.
               Spinning off the Mileage Plus frequent flier program.
               These spin-offs and divestitures have not come to fruition.

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