Strengths i. ii.

The airline has customized food menu and in-flight entertainment systems according to the destination it travels to. The company has a relatively young top management team who joined the company around the same time. This gives the team an added advantage of like-mindedness and similar attitude. The Company also encourages its managers and employees to arrive on time for work by providing incentives. The airline uses a single aircraft fleet (Boeing) which helps the firm to maintain its training, maintenance and replacement costs at a reduced level. The airline serves a range of domestic as well as international destinations. It is also the airline which serves the maximum number of international destinations compared to any other U.S. carrier. The Company returned to profitability in 2006 after 2 years of making losses. Good network, the airline serves 148 domestic and 134 international destinations

iii. iv. v.

vi. vii.

Weaknesses i. ii. iii. iv. v. vi. vii. viii. ix. The Go Forward Plan does not take in to account the environmental issues which are tagged along with flying the aircrafts. The service quality of the airline needs to be improved as the service quality is decreasing. Though the company provides on-time arrival incentives, it has a record of poor on-time performance. CAL has the worst record of overbooking and passenger bumping. Labor costs constituted 23.6 percent of total operating expenses in 2005. There was a 52 percent increase in long-term debt and capital lease payments in 2005. As of December 31, 2006, we had $5.4 billion of long-term debt and capital lease obligations. Our capital expenditures increased by $115 million from 2005-2006. Aircraft fuel and related taxes increased 24.2 percent due to a significant rise in fuel prices.

Opportunities i. The EU-US Open Skies presents an opportunity for CAL to fly between the U.S. and Londons Heathrow Airport. Any U.S. or EU airline would be allowed to fly to any point in the U.S. or EU. Devise measures to ensure low pollution by CAL flights. This would win the hearts of environmentalists and provide CAL with the image of an eco-friendly airline.

ii.

iii. iv.

v. vi.

Induct more Boeing 787 Dreamliners as they prove to be more efficient for long haul flights and can increase fuel efficiency. Reduce the number of short haul flights within the U.S. by networking with other airlines. Short haul flights consume more fuel due to takeoff and landing within a short period of time. Emerging market and expansion abroad Electronic ticket save time and reduce cost of airline ticket counter

Threats i. ii. iii. iv. v. Intense domestic rivalry is the main threat facing CAL. Low-cost regional jets and domestic flights have eaten in to the market share of CAL. Increasing fuel cost is another threat that CAL has to face. With the induction of B-787 Dreamliners, this can be reduced to a lower level. Rival airlines have emerged stronger post-bankruptcy. CAL needs to ensure that the operations are handled effectively so as to be more efficient. Rival airlines are purchasing new aircrafts which challenges CALs position as the airline with the youngest fleet. Increasing security costs are also a major threat to CAL. Due to terror strikes, the airlines have to ensure the safety of its passengers, airports and themselves. This has contributed to investing more in security measures Increasing fuel cost to 29.4% Increasing labor cost up to 24.5% Bad weather leads to flight delays and cancellations which raise expenses. U.S. airlines in international markets are subject to economic regulations by foreign government (example- European Commission) U.S. airline industry is one of the most heavily taxed of all industries.

vi. vii. viii. ix. x. Q. 1.

The continental should use the horizontal integration and market development strategy. By using horizontal integration the sales would boost over the years and the company can have a significant control over the entire air transport operations in the domestic airline market of United States as well as in the international airline operation as well. The expected growth of company will definitely become a threat for many of the domestic air carriers in the United States and it will increase the overall market share of the company in the coming years. Continental airlines cannot compete in terms of price, with the low cost airlines like AirTran, JetBlue and southwest. Continental should step into these small jets, low cost, less coverage areas niche market. Continental is sound in its financial figures so it should acquire one of the above mentioned low cost no-frills airlines to gain its share in this domestic market.

Q.2 Mergers and acquisitions in the industry are threats for continental in the short term, but it can face the threat by seeking the opportunities to expand its market and to improve quality besides cutting the cost. These companies are strong threat for Continental because the market share is closest. Continental should adapt to an aggressive mode of planning and execution. Continental should be proactive in finding out ways to outperform its competitors and should pay attention to its internal resources and factors so that the entire operation can be made effective and beneficial for the firm. Q.4. Continental, together with Continental Express and Continental Connection, has more than 2,750 daily departures throughout the Americas, Europe and Asia, serving 133 domestic and 132 international destinations. Continental Micronesia, and regional flights operated by Continental Express and Continental Connection, CAL operates more than 3000 daily departures throughout the Americas, Europe and Asia. The different branding reflects the turboprop aircraft used by these airlines, a change from the previous all-jet regional service offered by Continental. Whether the addition of turboprop service will affect the publics perception of Continental is to be seen as travelers tend to perceive turboprop aircraft as less safe than jet aircraft. Q. 5 Yes, Continental airlines should change their international strategy. They should introduce more flights to the European and Asian markets. Since Continental has the largest number of international destinations, it should try to retain that position by effectively and competitively accessing more destinations. Many U.S. airlines do not operate to destinations in West Asia. Most of their operations are on a code-sharing basis with British Airways or Air France. Destinations such as Istanbul, Tehran and other west Asian cities would guarantee more revenue for CAL. They could also start expanding their network by involving other major airlines in the U.S. such as Delta Airlines. Both of them could work on a code-sharing policy which would ensure reduced operating costs and maximum exposure to flight routes Q. 6. Fuel prices represent a serious market risk. With the increasing prices of fuel increases operating expenses. Continentals fuel expenses for 2007 were 29.4% of operating expenses, and the average price of fuel rose by 73% from 2004-2006.

Continental has two approaches for addressing high fuel costs. The first is through keeping its fleet of aircraft younger and newer, and adding fuel-saving devises such as winglets. Continental was one of the first airlines to add winglets to replace standard wingtips on its aircrafts. This reduced fuel consumption by up to 5%. Continental continues to add new aircrafts to its existing fleet and has ordered 25 Boeing 787 Dreamliners to provide added fuel efficiency on international routes.

Q.7. Continental was slow to adopt online bookings, and currently has about 24% of its revenues from its website. Continental reports that customers can easily book flights through its web site. That web site also offers electronic timetables for PCs, laptops, cell phones, and PDAs. Also, the web sites in a number of countries offer region-specific information. In addition, Continental offers Spanish and German web sites and the ability to purchase tickets online in all countries that Continental serves. (COFACTS, 1st Quarter 2008) Q.8. The EUUS Open Skies Agreement is an open skies air transport agreement between the European Union and the United States. The agreement allows any airline of the European Union and any airline of the United States to fly between any point in the European Union and any point in the United States. This agreement provides an opportunity for Continental to fly between the U.S. and Londons Heathrow Airport. Any U.S. or EU airline would be allowed to fly to any point in the U.S. or EU.

Specific Strategies: i. Continental Airlines should introduce winglets on all its aircrafts. This would help CAL to reduce fuel consumption and help them in reducing their operational costs. ii. CAL should introduce more flights to the European and Asian markets. Since CAL has the largest number of international destinations, it should try to retain that position by effectively and competitively accessing more destinations. Many U.S. airlines do not operate to destinations in West Asia. Most of their operations are on a code-sharing basis with British Airways or Air France. Destinations such as Istanbul, Tehran and other west Asian cities would guarantee more revenue for CAL. iii. Since CAL relies on regional jet service, they should start introducing new routes on their domestic market. These routes need not be short haul flights, but long enough flights so as to achieve good fuel efficiency. iv. They could also start expanding their network by involving other major airlines in the U.S. such as Delta Airlines. Both of them could work on a code-sharing policy which would ensure reduced operating costs and maximum exposure to flight routes Strategies for long-term objectives i. ii. iii. Continental has to start investigating more on their on-time arrivals. Flights which have on-time arrivals enjoy more benefits. More customers would start using their services. Continental should try to obtain above-average profits, which is one of the main points in their Go Forward Plan. Under the Make Reliability a Reality, the airline should ensure higher ranking with regard to on-time arrivals, baggage handling, complaints, and involuntary denied boardings. CAL, in the long run, could also introduce a low-cost airline which would benefit it in the same way Air Deccan has benefited Kingfisher Airlines in India. This low-cost service need not be only domestic. Tourists would benefit a lot from using a low-cost carrier to travel to eastern European or Caribbean countries. There are many examples which can be given with regard to low-cost airlines. As mentioned earlier, all the passengers who use air transportation for going to and getting back from work could use these services and CAL would stand to reap the benefits of it. As is the plan of CAL, introducing B-787 Dreamliners would end up being beneficial because once CAL has covered the cost of the aircraft, they would end up saving a lot of money on fuel cost. Though CAL already has frequent flyer programs and benefits for loyal customers, they should extend the service to beyond the boundary of the airports. Customers who are regular should be provided with complimentary pick-up and drop facility.

iv.

v.

vi.