United-Continental maps next steps in integration

By Mary Ellen Podmolik
Posted Jan. 26 at 3:37 p.m.

Passengers of United Continental Holdings Inc. should expect a more seamless flying experience by late spring on the recently merged United and Continental Airlines.

By the end of the second quarter, customers will be able to check in for flights at United or Continental counters, the carrier’s two Web sites will operate and sell tickets as an integrated network and the new branding strategy will be apparent, first at United’s hubs.

In the third quarter, a new airport lounge, the United Club, will operate and later in the year the two frequent-flier programs will be combined.

But customers will have to wait another 30 to 60 days to learn the airline’s seating configuration for its airplanes, Jeff Smisek, United’s president and CEO, said Wednesday.

That  is being keenly watched by frequent-fliers who are eager to learn whether the new management, dominated by Continental executives, will retain United Airlines’ Economy Plus coach seats.

During a conference call Wednesday morning with financial analysts to discuss fourth-quarter and full-year earnings for the combined company, Smisek said the carrier was moving swiftly to integrate its operations and manage its costs in a time of rising fuel prices. And while working on all those fronts, Smisek said the airline, whose merger became official Oct. 1, was not going to let competitors rob it of customers.

“Let me be clear,” Smisek said. “We are not going to let that happen.”

In the fourth quarter, the first in which United and Continental operated as a combined company, the company earned $160 million, or 44 cents a share, excluding merger-related  and other costs of $485 million. Including those costs, United Continental lost $325 million, or $1.01 a share during the quarter.

Shares of United Continental were trading around $25.70 in mid-day trading on the New York Stock Exchange, up more than 6 percent.

Revenue in the quarter rose 15 percent, to $8.4 billion, and in the October-December period, 83 percent of its seats were filled. Executives noted that revenue derived from its premium customers rose 20 percent in the fourth quarter, and additional investments are planned to benefit its most loyal customers.

Rising oil prices remain a concern. On a pro forma basis, the carrier’s fuel costs rose 27 percent for the fourth quarter and 33 percent for the year. First-quarter fuel costs are up 18 percent from a year earlier, according to Zane Rowe, UAL’s executive vice president and chief financial officer.

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