Travelers Will See Changes At United Continental

Published January 26, 2012 11:09PM (EST)

Travelers will see big changes this year when they fly on United.

The airline, which merged with Continental in October 2010, said on Thursday that it's on track to combine computerized reservation systems and frequent-flier programs in early March. After that, it will move to a single website.

The update came as United Continental Holdings Inc. posted a fourth-quarter loss, due mostly to merger costs.

The combination of the two airlines into one carrier flying under the United name will speed up this year. The March computer changeover is an important part. The airline is a world-wide operation flying an average of 264,000 people every day. To sell tickets, its computers have to know where those planes are going and who is on them.

The changes mean that passengers will see a more unified airline. Travelers will be able to use ticket counters for either airline. The company's planes will have more gate options, because the computers at those gates will be able to handle both United and Continental flights.

Chairman and CEO Jeff Smisek said the company has done four dress rehearsals of moving the data. If something goes wrong they can either move back to the old system or postpone the transfer, he said.

"We are exceedingly well prepared for it," he said on a conference call. "I am confident this will go as planned."

Besides the computer switch, the company has repainted hundreds of planes and moved operations and some workers from Continental's old headquarters in Houston to its new base at United's headquarters in Chicago.

Largely because of merger expenses, United Continental lost $138 million, or 42 cents a share, in the fourth quarter. That was smaller than the year-earlier loss of $325 million, which was also due to merger expenses.

The company incurred $517 million in merger expenses in 2011, including $170 million in the fourth quarter. Chief Financial Officer Zane Rowe said costs are expected to continue at that fourth-quarter level at least through the first half of this year.

Helped by fare increases, revenue rose 5.5 percent to $8.93 billion, matching analyst expectations. Revenue for each passenger flown one mile rose 8.2 percent.

Despite higher fares and strong travel demand, United Continental said flying capacity in 2012 will be flat to down 1 percent. For the first quarter, it said flying capacity will range between rising 0.3 percent to falling 0.7 percent. It said it would reduce domestic flying and increase international flying. Its flying capacity shrank slightly last year, too.

For all of 2011, the company earned $840 million, down from a 2010 profit — if the two companies had been combined — of $955 million. Full-year revenue rose 8.8 percent to $37 billion.

Also Thursday, JetBlue Airways Corp. said its fourth-quarter profit nearly tripled to $23 million, or 8 cents per share, on an 11 percent increase in traffic. Revenue rose 22 percent to $1.15 billion. Both figures were better than analysts expected.

Alaska Air Group Inc., parent of Alaska Airlines, earned $64 million, or $1.76 per share, for the quarter. That was down 1 percent from a year earlier as its fuel bill jumped. Revenue rose 9 percent to $1.04 billion. Both figures were below analyst expectations.

United Continental shares rose $1.29, or 6.3 percent, to close at $21.70. JetBlue rose 23 cents, or 4.1 percent, to close at $5.80. Seattle-based Alaska Air Group fell $2.73, or 3.6 percent, to $72.71.

By Salon Staff

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