According to press agencies Reuters and Bloomberg, United Airlines and Continental are to announce a full merger today. The new name will be United, the HQ will be Chicago and Jim Smisek, the CEO of Continental, will be the new boss. This is the second phase of the continuing consolidation in US airlines, following the merger of Delta and Northwest last year. The merger will see the formation of the largest airline in the world. At present, United employs 46.000 people and Continental 41.000.
NEW YORK (CNNMoney.com) -- UAL Corp.'s United Airlines announced a deal to merge with Continental Airlines on Monday, in a move that would create the world's largest airline, with estimated sales of $29 billion a year.
The combined company, which will fly under the United moniker and Continental logo, is now larger than Delta Air Lines (DAL, Fortune 500), which became the country's largest airline when it merged with Northwest Airlines in 2008.
The combined companies will serve more than 144 million passengers per year and fly to 370 destinations in 59 countries, the companies said in a statement.
"This combination will provide a strong platform for sustainable, long-term value for shareholders, opportunities for employees, and more and better scheduled service and destinations for customers," said Glenn Tilton, chairman, chief executive of UAL Corp., in a statement.
Under the terms of the deal, Continental shareholders will receive 1.05 shares of United common stock for each Continental common share they own, the companies said in a statement.
United shareholders would own approximately 55% of the combined company and Continental shareholders would own approximately 45%.
As a result of the merger, the companies expect to save between $1 billion and $1.2 billion over the next three years.
United and Continental discussed combining in 2008 and Houston-based Continental backed out. United boasts a stronger financial position this time around though.
Thanks to an improved financial performance, United was expected to have more weight in the talks. Last weekend, the company pushed to base the deal on the closing price of its shares the day before an agreement is signed.
Assuming the deal clears anti-trust hurdles, the combined airline would be based in Chicago and use the United name but would be run by Continental chief executive Jeff Smisek, the source said.
Last month, United also discussed the possibility of merging with he Phoenix-based US Airways (LCC, Fortune 500).
Shares of UAL (UAUA, Fortune 500) were unchanged Friday while Continental's (CAL, Fortune 500) stock fell 1.5% Friday.
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