United and Continental Airlines Merger is on Track

Jeffery Smisek says United Continental Holdings Inc. is on track to complete one of the trickiest parts of its merger — combining reservation systems — as scheduled by the end of the first quarter.

The Chicago-based airline's CEO said Thursday the company already has done several dry runs and is confident it will meet its deadline. "We've thoroughly tested the system. The conversion will take place in early March."

Since United and Continental merged on Oct. 1, 2010, the company has worked to blend the two into one airline flying under the United name. It has to integrate the massive computer systems that run reservations, scheduling and corporate functions. It also has to combine fleets, maintenance procedures and groups of workers that in some cases have come from different unions.

United is adopting Continental's reservation system, known as Shares. The changeover ultimately will allow United and Continental to offer customers more ancillary products — everything from seats with more leg room to airport lounge access. The airline brought in more than $2 billion in revenue last year, out of a total of $37.1 billion, from ancillary products.

Analysts and other observers have been watching the reservation system integration carefully. It's one of the toughest tasks in an airline merger and one that can impact customers directly. Unlike Delta and Northwest airlines, which used the same basic technology platform before they merged in 2008, United and Continental used different systems.

Mr. Smisek also said Thursday that the airline is investing more in new equipment, taking delivery of two dozen planes in the second half of the year, including five Boeing 787s and 19 737s. It will retire 22 planes, mostly older, less fuel-efficient 737s. Last year, the airline added five new planes.

United shares rose 7 percent to about $22 on Thursday, after it reported fourth-quarter earnings that beat analyst expectations. The Chicago-based airline said it earned 30 cents a share, excluding one-time charges, compared with forecasts of 12 cents per share.

The company's net loss narrowed to $138 million, or 42 cents per share, from $325 million, or $1.01 per share, a year earlier.

United also said revenue per mile flown in January is on pace to increase 11 percent, about double the growth rate in December and better than analysts were predicting.