AAL American Airlines Group Inc

CHICAGO—Oscar Munoz, five months after returning from medical leave to his post as chief executive of United Continental Holdings Inc., said he now has the management team and board of directors to regain positive momentum for a carrier still struggling after its 2010 merger.

In an interview, Mr. Munoz, 57 years old, said he was back to strong health following the heart-transplant operation he needed in January after a heart attack last fall, just weeks into his new job.

While his right hand isn't fully functional and he must take steroids, Mr. Munoz said he was jogging and biking again. The CEO said he has gone back to shaking hands instead of doing fist bumps and is flying on commercial airliners instead of taking private jets, precautions he needed earlier to protect his weakened immune system.

"I go in for increasingly infrequent checkups," the tanned Mr. Munoz said in an interview Tuesday. "But I've learned the phrase, 'Just because you can doesn't mean you should.'"

Now, he said, he's eager to make up for lost time. Since returning to full-time work in March, Mr. Munoz has overseen an improvement in the carrier's operating performance and forged better labor relations. Partly under pressure from two hedge funds that in the spring sought a shake-up in management, Mr. Munoz has been rebuilding his team and board.

But margins at the nation's third-largest airline by traffic still lag its biggest competitors, and it needs to regain customers who defected to rivals over the past few years. United also must shed its reputation for being a "docile" industry follower and become more innovative, Mr. Munoz said.

But he is hopeful. "We have a new team, new processes, a new strategy," he said on Tuesday, speaking in his office on the 11th floor of Chicago's famous Willis Tower skyscraper. "We've got the resources. There are no more holes in my management lineup."

On Monday, Mr. Munoz plugged the last hole by hiring an industry heavyweight who was president at larger rival American Airlines Group Inc. to take on the role of president at United—a job Mr. Munoz also held. The addition of Scott Kirby, 49 years old, was an "opportunistic hiring," Mr. Munoz said.

In recent months, Mr. Munoz and the United board discussed splitting his job into two. Mr. Munoz could focus on strategy and finances, and he could leave the day-to-day functions of operations, marketing, sales and revenue management to someone else.

"Less than a handful of people" have the skills needed to oversee revenue at such a large airline, Mr. Munoz said.

In theory, that No. 2 executive could one day take over the top job, though one person familiar with the matter suggested that Mr. Kirby's role isn't an automatic path to it.

The move was both fast—taking place over a couple of weeks—and unusual, said a person knowledgeable about the process. United reached out when word spread that Mr. Kirby, a veteran airline executive well-known to Wall Street, was soon to be terminated by American in an unrelated executive succession decision, the person said.

Mr. Munoz said the vetting was painstaking, "but we did it quickly." Likening Mr. Kirby to a National Basketball Association star, he said: "When LeBron James, shows up at your doorstep, you're going to let him practice with your team, if not join the team."

United declined to make Mr. Kirby available for this story.

Mr. Kirby, who was let go by American on Monday, also walked away with more than $13 million in cash and stock in a voluntary severance, a payout based on his 21 years of service including orchestrating two mergers, American said.

The same day, Mr. Kirby started his new role as president at United, where he received a signing bonus of $5 million in stock options. He will be paid an annual base salary of $875,000, along with other incentive-based compensation, according to a regulatory filing.

The hiring of Mr. Kirby is "an overwhelming positive" for United, according to Credit Suisse. United shares rose 9% Tuesday on the news and had slipped 2.6% to $49.66 in midday trading Wednesday.

Mr. Munoz said he was shocked when he took over a year ago.

The business side had been distracted by the merger and the investigation into possible corruption involving the airline and the Port Authority of New York and New Jersey, which ultimately led to the ouster of then-chairman and CEO Jeff Smisek.

"We weren't unified in what direction we needed to go," he said.

Morale among the 85,000 employees was terrible, which was "the soul-destroying part," Mr. Munoz said. The executive said United should no longer be regarded as "an insolvable puzzle" and must get on with its turnaround.

Write to Susan Carey at susan.carey@wsj.com

(END) Dow Jones Newswires

August 31, 2016 12:55 ET (16:55 GMT)

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