Continental Airlines

Presentation Subtitle
Why did the airline decline?
Market

● Flights that are not filled

● Airplane scheds not matched with high demand flight routes
● Food not good (serving of food not matched with correct timing)
● Airline ranks 10th out of 10
Financial

● Cannot pay debt

● No Cash flow, cannot pay incoming debt
● Wrongly reported cashflow (overstated)
● Operation cost higher than sales
● 2nd bankruptcy (hasnt posted profit since 1978 bankruptcy)
● Net Income & Revenue decline
● 18% of flights were cash negative
Process

● 7 Different Color Schemes

● Dirty Airplane

Customer Service

● Slow Reservation System

● Departures were long and not on-time
● No announcements of delays
● Sub-standard customer response policy
People Concerns

● Top Management Changing Yearly

● Managers crippled by anxiety
● Employees not proud in wearing shirt with Logo
● Mismatched incentive scheme
● Employees not customer-centric, unbothered by poor in-flight service
● Crews not concerned about lousy services
Was it worth saving?
Was it Worth saving?

Economical

● Wastage Problem (Inefficent Flight Routes)

● Loss of Sales (Angry Customers, Delayed flights, unhappy with services)
● Cashflow being overstated

Emotional 1992 1993 1994 1995 1996 1997

Revenue 5.4 5.8 5.7 5.8 6.4 7.2

● Jobs - 40,000 employees
Net -125 -199 -613 224 319 385
Income
 4 Point Strategy

Fly to Win Fund the Future Make Reliability a Working Together

● Focus on core assets ● Track cash. ● Restore employee
● Expand customer mix ● Restructure the balance sheet. Reality confidence in management:
from backpacks and flip- ● Restructure the fleet: ● Perform in the top 50% of the ● Maintain peace among the
flops to suits and ○ Reduce the number of industry on key work groups.
briefcases. fleet types from 13 to 4. ● DOT metrics ● Establish a results oriented
● Revise marketing policies ○ Match airplane size ○ On-time performance culture:
to enhance relationships with market size. ○ Baggage mishandles ○ Let people do their
with travel agents, ○ Eliminate above market ○ Customer complaints jobs without
corporations, and leases on airplanes. ○ Involuntary denied interference.
frequent fliers. ● Sell nonstrategic assets. boardings ○ Treat one another
● Improve image of fleet: with dignity and
○ Paint interiors and exteriors. respect.
○ Add phones.
○ Offer first-class seats.
● Improve aircraft cleanliness.
● Improve food service.
 How was the turn around process followed?
Key Takeaways

● Cleaned Planes/Repainted
● Reorganized manpower
● Fixed the flight schedules
● Forgiveness Campaign
● Cut Advertising Budget (50%)
● Asked customers what they want
● Fixed performance metrics
● Fixed Food policy
● Accepted employee suggestion/feedback
● Company bulletin board (with constant updates)
● Make employees feel that management is on their
side (closing Greensboro)
● Offered stock options
 How was the turn around process followed?
Reliability a Reality
Key Takeaways
● Cleaned Planes/Repainted
Fly to Win
● Fixed the flight schedules
● Fixed performance metrics
● Forgiveness Campaign
● Asked customers what they want
Working Together
● Fixed Food policy
● Reorganized manpower
Fund the Future
● Accepted employee suggestion/feedback
● Company bulletin board (with constant
● Cut Advertising Budget (50%)
updates)
● Make employees feel that management is
on their side (closing Greensboro)
● Offered stock options