October 25, 2000
(Computerworld)
Chicago-based UAL Corp.'s United Air Lines Inc. today announced the creation of a two-headed e-commerce monster that will focus on the development of United's house business on the Internet and on investing in businesses leveraging Web and wireless technologies.
The Chicago-based subsidiary, called United NewVentures, will explore and take equity positions in Internet distributors. United already owns pieces of online air auctioneer Priceline.com Inc. and its newly launched rival Hotwire.
United also has been instrumental in forming Orbitz, an online travel agency set to start competing next year with Travelocity.com Inc. and Expedia Inc. (see story).
Doug Hacker, formerly United's chief financial officer and now president of United NewVentures, said the company plans to invest more than $100 million during the next year in new partnerships and in building United's online brand.
Hacker said the new subsidiary could spin off into a separate public company in the future, depending on its success.
"Right now, we're at the work of creating value. . . . Once that has happened, we really should turn to that question [of becoming a separate entity]," Hacker said.
Meanwhile, United's Web site and frequent-flier program will be a division of NewVentures called United NetWorks. Scott Praven, who has headed the company's e-commerce operations, will be president of NetWorks.
He said that roughly 5% of United's North American revenue comes through Internet sales and that the company is looking to quadruple that number during the next three years.
In August, Atlanta-based Delta Air Lines Inc. created an internal e-commerce unit to do much of the same work as United's external model (see story). Delta officials said such ventures should stay within a company's walls.
Praven argued that having the separate Chicago location, which is 8 miles from United's main offices in Oak Grove, Ill., allows his staff to work in a single space and to make unilateral decisions.
Electronic ticketing and self-service kiosks haven't been included under United's e-commerce umbrella, but Praven said his division will be heavily involved in the development and implementation of those technologies.
Henry Harteveldt, senior analyst for Forrester Research Inc. in Cambridge, Mass., praised United for becoming aggressive about New Economy investment opportunities.
He said the company needs to go even further with its model, incorporating all technological efforts and managing relationships with traditional distributors like Fort Worth, Texas-based Sabre Inc. and Rosemont, Ill.-based Galileo International Inc., which are migrating portions of their businesses to the Internet.
"Focusing just on consumer stuff is only part of the challenge," Harteveldt said. "They have to think about how technology and the Internet are going to change their whole business."
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