Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

United and Continental merge



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.

Last week, the Chicago-based company reported a first-quarter loss of $82 million, much narrower than the $382 million loss posted a year earlier. And revenue jumped 15% to $4.2 billion.

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.

CNNMoney.com's Hibah Yousuf and Ben Rooney contributed to this story To top of page

Index Last Change % Change
Dow 18,472.17 -1.58 -0.01%
Nasdaq 5,139.81 29.76 0.58%
S&P 500 2,166.58 -2.60 -0.12%
Treasuries 1.53 0.01 0.79%
Data as of 9:09am ET
Company Price Change % Change
General Electric Co 31.28 -0.19 -0.60%
Intel Corp 34.83 -0.26 -0.74%
Regions Financial Co... 9.10 -0.05 -0.55%
Marathon Oil Corp 13.13 -0.65 -4.72%
Linear Technology Co... 59.23 -3.26 -5.22%
Data as of Jul 27
Sponsors

Sections

HSBC banker arrested at JFK airport as he prepared to leave the country. He and former trader face federal charges they manipulated currency trades. More

Americans are growing more hesitant to eat out. Whether the slowdown is being driven by rising prices, slowing job growth or even terrorism, some believe it could be the start of a painful restaurant recession. More

It's about to get harder for some luxury all-cash home buyers to hide their identity from the U.S. government. More