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United and Continental to Merge in $3.15 Billion Deal

Published May 3, 2010 on Pilot Jobs

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Continental Airlines Inc. and United Airlines parent UAL Corp. said Monday they would merge their operations in a $3 billion-plus all-stock deal that would create the world's No. 1 global carrier, with combined annual revenue of $29 billion.


The transaction, valued at roughly $3.15 billion, follows weeks of negotiations that were hung up most recently over price terms.

The United Airlines brand name will take over, and United Continental Holdings Inc. will be the holding company. The new airline will be based in United's hometown of Chicago.

Under the deal that finally emerged, Continental shareholders will receive 1.05 UAL shares for each share of common stock that they now own. UAL shareholders will own 55% of the company.

Continental Chief Executive Jeffrey Smisek has been tapped as CEO of the combined company and is slated eventually to become its chairman. Glenn Tilton, CEO of UAL, will serve as nonexecutive chairman through 2012.

Both companies' boards have approved the terms, and shareholders are expected to vote in their favor by September. The deal, which is subject to regulatory reviews, is expected to close in the fourth quarter.

By the first half of 2012, the new airline should be operating on a single operating certificate to become the world's largest airline in terms of traffic.

The carriers, currently partners in the Star Alliance and sharing revenue on international routes, will have combined annual revenue of $29 billion with $7.4 billion in unrestricted cash.

"This combination brings together the best of both organizations and cultures to create a world-class airline with tremendous and enduring strengths. Together, we will have the financial strength necessary to make critical investments to continue to improve our products and services and to achieve and sustain profitability," Tilton said in a statement.

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