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United CEO Smisek Sees ‘Significant Progress’ in Integration

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Dec. 14 (Bloomberg) -- 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.

Inflight Catering

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 1/2 years to complete.

To contact the reporter on this story: Robert Fenner in Queenstown, New Zealand at rfenner@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net