Making United and Continental Fly in Formation

On June 29, United Continental Holdings executive Lori Gobillot’s calendar was jammed with 27 meetings and phone calls, some scheduled simultaneously. That’s pretty typical these days as she oversees almost three dozen teams of managers who—one decision at a time—are stitching together United and Continental to form the world’s largest airline. In technology alone, the carriers, which merged last October, have 1,400 separate systems, programs, and protocols. Workers from the two predecessor airlines are represented by different labor unions and subject to dissimilar work rules. Even the airplanes are mismatched. United’s fleet has first-class cabins; Continental’s planes have just business and coach. United Continental has told Wall Street that it can find $1.2 billion in new revenue and cost savings from the marriage within three years. That can only come from rationalizing operations and removing redundancies—and fast. So the pressure is on Gobillot, vice-president of integration management. “It’s such a complex, stressful, difficult experience,” she says. “But once you’re finished, you have exactly the house you want.”

The resulting megacarrier will ferry passengers between 373 airports in 63 countries, with major connecting hubs in New York, Chicago, Houston, San Francisco, Washington, Los Angeles, and Tokyo. United Continental is betting that its huge list of destinations—and a frequent-flier program that has more members than France has citizens—will lure high-paying business travelers from Delta Air Lines and American Airlines. The carrier’s sheer heft also suits an industry where economies of scale favor the big. Simply shaving a half-cent off United Continental’s per-mile operating costs would have boosted first quarter operating results by about $260 million.