US airlines United and Continental today announced a long-awaited merger that is set to create the world's largest airline, according to dpa. Falling passenger numbers, high fuel prices and intense competition in the economic crisis have spurred on the move, which must still be approved by shareholders and antitrust regulators. Continental boss Glenn Tilton, who would become non-executive chair of the new company's board, called it a "merger of equals" that would "create a world-class and truly global airline ... better positioned to succeed in a dynamic and highly competitive global aviation industry." The two airlines fly more than 144 million passengers a year to 370 destinations in 59 countries, but with limited overlap. United has a stronger presence across the US and the Pacific. Continental focuses more on the north-eastern states and Europe and Latin America. Continental shareholders are to receive 1.05 shares of United common stock for each of their Continental common shares. United shareholders would then own 55 per cent of the new company, while Continental shareholders will hold around 45 per cent. The holding company for the new airline is to be called United Continental Holdings. The airline itself will go under the name of United, but feature Continental's logo. Jeff Smisek, Continental's chairman, is set to become chief executive officer, but operations will be based out of United's headquarters in Chicago. "This combination brings together the best of both organizations and cultures," Smisek said. "Together we have the financial strength necessary to make critical investments to continue to improve our products and services and to achieve and sustain profitability." The merger was approved unanimously by both boards of directors. The airlines were confident that regulators and shareholders would back the deal, which is expected to be complete by the end of 2010. The US Justice Department would be examining the "competitive prospects" of the merger, said spokeswoman Gina Talamona, but could not offer a timeline for the investigation. Talks with the two airlines' unions also still had to take place, but Smisek said he didn't expect much backlash. With most airlines currently losing money, Smisek said the merger would maintain jobs in a difficult environment for the industry. United and Continental had already tried to join forces two years ago, but talks failed. United was also in discussions over a merger with US Airways in the last few weeks, but switched to Continental at the last minute. The deal comes after Delta and Northwest Airlines merged in 2008 and could spark more consolidations. In Europe, British Airways recently grabbed Spanish airline Iberia. Germany's Lufthansa snapped up Swiss, Britain's BMI, Brussels Airlines and Austrian Airlines.
