United Hires Consultant Bain to Plan Integration With Continental Airlines
Bain is the same company used by Delta Air Lines Inc. when it bought Northwest Airlines Corp. in 2008, forming the world’s largest carrier. United has created almost 30 groups to work on the integration planning for areas including accounting and technology, Tilton told reporters today after United’s annual shareholders meeting in Elk Grove, Illinois.
United and Continental are seeking regulatory approval to combine under an all-stock merger they announced on May 3. They would surpass Delta as the world’s biggest airline and mesh United’s Pacific routes with Continental’s service in Latin America and over the Atlantic.
The process of integrating two companies is “a very simple one to contemplate and difficult to execute,” Tilton said. Bain, based in Boston, will help establish milestone goals and ways to measure progress against those targets, he said.
“It looks remarkably like a restructuring,” said Tilton, who was CEO of the company during its three years of reorganization under Chapter 11 bankruptcy.
United and Continental had $29 billion in combined revenue last year, and have about 700 jets in their main fleets and employ 88,000 workers. The combined company will keep United’s name and Chicago headquarters and be run by Continental CEO Jeff Smisek while Tilton becomes chairman.
Other senior executives for the combined company haven’t been selected yet, and won’t be until the merger closes around the end of the year, Tilton said.
A six-member integration committee includes Smisek, Tilton, United’s Chief Administrative Officer Pete McDonald, Continental’s Chief Marketing Officer Jim Compton and the chief financial officers of both companies.
United President John Tague will remain focused entirely on running the company’s day-to-day operations so integration planning “doesn’t become a drag on performance,” Tilton said at the shareholders meeting. He said distraction is a “legitimate, genuine risk.”
Tague will also work on trying to exceed United’s own plan for performance while it remains a standalone company until the merger closes, Tilton said.
The carriers have said they will generate as much as $1.2 billion in synergies.
Merger documents are being filed in the U.S. and the European Union, Smisek said yesterday at Continental’s annual meeting in Houston. Shareholders will vote on the tie-up in September, the companies have said.
Delta and Northwest agreed to merge in April 2008, and spent about two years fully integrating operations. Delta had 26 integration teams, spokeswoman Betsy Talton said.