Sandy Bad, but ‘Fiscal Cliff’ Could Be Worse: United CEO

United Continental did "a tremendous job" managing the aftermath of super storm Sandy, CEO Jeff Smisek told CNBC on Friday, but added that Washington's inability to navigate the "fiscal cliff" could be potentially more devastating to the airline industry.

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The airline operator said Thursday that Sandy had sliced into its October revenue by about $90 million and forced it to cancel more than 5,000 flights, which left countless passengers marooned in airports around the region.

Smisek, however, said the flight cancellations were "the right thing to do," adding that the company's staffers did a "tremendous job" in the face of what the United Continental

CEO said called a logistical nightmare.

"We take very conservative actions," Smisek said. "Safety is very important and we're not going to operate a flight if it's not safe, so we make sure that we err on the side of safety all the time."

Meanwhile, markets and businesses are increasingly fretting over Washington's ability to avert a raft of tax hikes and deep spending cuts set for next year. As a result, Smisek said the so-called fiscal cliff could have a more disastrous effect on his business. (Read More: Congress Sees Rising Urgency on Fiscal Deal.)

"It makes it difficult for us to operate," Smisek said. "The uncertainty that you get with the economy [and] a second recession would be bad for everybody," he said, speaking of the impact on both passengers and airlines.

"If it happens, the demand would fall off and we'd have to adjust capacity for it, just as we do all the time," he said. Ultimately, Smisek said he had faith that Congress and the White House will get it right, adding, "They don't really have a lot of choice, do they?"