United Con­ti­nen­tal CEO sees ‘sig­nif­i­cant progress’ in in­te­gra­tion

The Pak Banker - - Company& -

QUEEN­STOWN: United Con­ti­nen­tal Hold­ings Inc. Chief Ex­ec­u­tive Of­fi­cer Jeff Smisek said the com­pany had made "sig­nif­i­cant progress" as it in­te­grates op­er­a­tions fol­low­ing an Oc­to­ber com­bi­na­tion that cre­ated the world's largest air­line.

The car­rier has reached ac­cord with Con­ti­nen­tal Air­lines Inc. ground work­ers and me­chan­ics, and is "hope­ful" of soon get­ting an agree­ment with cabin crew af­ter a pre­vi­ous deal was re­jected, Smisek said in an in­ter­view to­day in Queen­stown, New Zealand. Ad­vanced talks with pi­lots are also un­der way, he said, while at­tend­ing a meet­ing of Star Al­liance car­ri­ers.

"We are mak­ing con­sid­er­able progress," he said. "The syn­er­gies we pro­jected are very much on track."

United Con­ti­nen­tal, formed through UAL Corp.'s takeover of Con­ti­nen­tal, ex­pects to achieve $1.2 bil­lion in sav­ings and rev­enue gains through the com­bi­na­tion, Smisek re­it­er­ated. The Chicago-based com­pany will con­tinue to fly as two sep­a­rate brands for at least an­other 12 months un­til U.S. reg­u­la­tors grant clear­ance for it to op­er­ate as a sin­gle air­line, he said.

The in­te­gra­tion of the two air­lines' fre­quent-flyer pro­grams has be­gun and may take a year, Smisek said.

The com­pany is also work­ing with air­ports world­wide to po­si­tion flights at neigh­bor­ing gates, he said.

Work the air­lines did prior to the com­bi­na­tion through their mem­ber­ship of the Star Al­liance has helped in this re­gard, he said.

The com­pany will con­tinue to use Con­ti­nen­tal's Chelsea in­flight cater­ing unit, while also us­ing other sup­pli­ers, Smisek said.

"How much vol­ume we use through them will de­pend on cost," he said.

The $3.47 bil­lion all-stock merger, which com­bined the num­ber 3 and num­ber 4 U.S. car­ri­ers, was com­pleted on Oct. 1. United leapfrogged Delta Air Lines Inc. to be­come the world's biggest car­rier fol­low­ing the deal.

The new com­pany had $29 bil­lion in com­bined rev­enue last year, op­er­at­ing 700 jets in its main fleets and em­ploy­ing more than 87,000 work­ers.

United Con­ti­nen­tal's in­te­gra­tion is be­ing ad­vised by Bain & Co., the con­sul­tant that At­lanta-based Delta used to mesh op­er­a­tions with North­west Air­lines Corp. start­ing in Oc­to­ber 2008, a process that took about 1 ½ years to com­plete.

More­over, Con­tin­ued de­lays in Boe­ing's 787 pro­gram has forced United Con­ti­nen­tal to de­fer the planned launch of non­stop ser­vice be­tween Hous­ton In­ter­con­ti­nen­tal Air­port and Auck­land, New Zealand, from late 2011 to some­time in 2012. Dur­ing the merger process that cre­ated United Con­ti­nen­tal Hous­ton-based Con­ti­nen­tal Air­lines un­veiled plans to as­sign its first 787-8 to the Auck­land Air­port route on Nov. 16, 2011, af­ter tak­ing de­liv­ery of the air­craft in Au­gust. How­ever, the car­rier now con­firms the route's launch is be­ing de­ferred un­til an un­spec­i­fied date in 2012 as Boe­ing's de­liv­ery sched­ule con­tin­ues to slip.

An air­line spokes­woman con­firms the de­lay, not­ing that while Boe­ing 777s al­ready in the car­rier's fleet could serve the city pair, both eco­nom­ics and air­craft avail­abil­ity mean the Auck­land route will have to wait un­til the 787s start ar­riv­ing.

Con­versely, a non­stop to Nige­ria's Mur­tala Muhammed In­ter­na­tional Air­port in La­gos also in­tended for a 787-8 will still be­gin in Novem­ber 2011 (Avi­a­tion Daily, Dec. 1), al­though this ini­tially will be served by a 777. -Bloomberg

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