92 Years Ago: The Merger That Formed United Airlines

Exactly 92 years ago today, on March 28, 1931, United Airlines began life as a management corporation to coordinate United Aircraft and Transport Corps (UATC) airline subsidiaries. While United Airlines’ history began in 1931, the airline can trace its roots back to 1926 when Walter T. Varney started a mail service between Pasco, Washington, Boise, Idaho, and Elco, Nevada.

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Later the same year, Pacific Air Transport (PAT) began flying mail between Seattle and Los Angeles. The next cog in the wheel of United Airlines began turning in the summer of 1927 when Boeing Air Transport (BAT) offered passenger flights between Chicago and San Francisco. BAT expanded its passenger service further in September 1927 by offering flights from New York to Chicago. The new service became the first transcontinental route enabling passengers to fly from New York on the East Coast to San Francisco on the West Coast with a change of plane in Chicago.

Airlines merged to form large corporations

As air travel began to grow, plane makers and airlines began to merge, forming large corporations. The media saw this as a way of manipulating the market and cried foul. The build-up to all the fuss followed from the Air Mail Act of 1930 when Postmaster General met with executives from the country’s airlines. The media claimed that the airlines effectively divvied their air mail contracts.

Smaller aircraft operators complained that they were excluded from being awarded contracts and called for an investigation into what had happened. A Senate investigation found that the process of awarding the mail contracts needed to be revised. As a result, President Franklin D. Roosevelt canceled all the mail contracts and ordered the Army Air Corps to deliver the mail.

The Army Air Corps was not ready

Unprepared and with minimal experience of flying at night, the Army Air Corp suffered several crashes that led to the deaths of 13 pilots. On May 8, 1934, new Postmaster General James A. Farley issued temporary mail contracts that led to the restructuring of the airline industry and the modernization of the Army Air Corps.

United Airlines somehow managed to get back all its mail routes but was forced to strip itself of all its non-airline affiliates. Also, because of his involvement in the scandal of the initial contracts, company president Philip G. Johnson was barred from holding an executive title.

Now separate from Boeing in Seattle and engine maker Pratt & Whitney in Connecticut, United’s new president William Allan Patterson was free to decide what was best for United Airlines.

United Airlines was involved in another merger many years later

Facing stiff competition from low-cost carriers and a challenging economic climate in the late 2000s, United Airlines was losing money and needed to find a solution. Houston, Texas-headquartered Continental Airlines, was in a similar position, also looking to reverse its losses. United and Continental entered talks after seeing how Delta Air Lines and Northwest Airlines merged their operations. Both airlines concentrated their efforts in different marketplaces, with United a more significant player in the West and Asia, while Continental focused more on the East Coast and Europe.

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Following successful talks, it was agreed that the new airline would operate under the United name as it had a more prominent recognition. However, the two did decide to keep Continentals’ yellow globe logo. On March 31, 2013, the merger was complete creating what was, for a time, the largest airline in the world.