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Home  >  Airline Merger • Continental Airlines • News • United Airlines  >  United Will Buy Continental for $3.2BN
Airline MergerContinental AirlinesNewsUnited Airlines

United Will Buy Continental for $3.2BN

Matthew Klint Posted onMay 3, 2010 Leave a Comment

Numerous media outlets are reporting that the UA-CO merger has been finalized.

UAL Corp, parent of United Airlines, will buy Continental Airlines Inc. for $3.2 billion, forming the world’s largest carrier in a merger that further shrinks the embattled U.S. airline industry and could drive up air fares, sources said on Sunday.

The boards of directors of both companies unanimously approved the deal, which was expected to be announced by the carriers on Monday morning, sources familiar with the discussions said. UAL and Continental declined to comment and neither airline has confirmed the votes.

If given regulatory approval, the carrier would be called United Airlines and would be based in Chicago, with over $29 billion in annual revenue, a source said. The deal would generate up to $1.2 billion in revenue and cost benefits for the combined company.

Tomorrow will be a big day.

Under the terms for the all-stock merger, UAL Chief Executive Glenn Tilton would become non-executive chairman of the combined carrier while Continental CEO Jeff Smisek would become chief executive.

The carriers are planning a 16-member board with six directors from each airline, plus Tilton and Smisek, and two seats from labor unions. The airlines hope for US regulatory approval of proposed merger by year’s end.

Time to retire my Glenn’s Gotta Go bracelet. Too bad he’ll still be on the Board.

The new company on paper now would have a combined work force of nearly 90,000 employees and a combined fleet of 693 planes.

But how many in two or three years? I predict overlapping routes will be cut (no need for multiple flights to Europe from both IAD and EWR) and so will staff. The new UA will still be world’s largest airline, but not as large as it will be in the infant merger stages.

I’m bummed out tonight. I was hoping the merger would be averted and the airlines would remain separate. While I think that CO and UA are the best match, I’m not looking forward to higher fares and the possible end of UA’s generous routing rules and compensation system.

The switch has been flipped. Skynet has launched.

Previous Article Reader Input Needed: Business or First Class?
Next Article CO/UA Merger: Disappointing Livery and a New Slogan: "Let’s Fly Together"

About Author

Matthew Klint

Matthew is an avid traveler who calls Los Angeles home. Each year he travels more than 200,000 miles by air and has visited more than 135 countries. Working both in the aviation industry and as a travel consultant, Matthew has been featured in major media outlets around the world and uses his Live and Let's Fly blog to share the latest news in the airline industry, commentary on frequent flyer programs, and detailed reports of his worldwide travel.

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