Washington, May 3 (Inditop.com) America’s two major airliners, United Airlines and Continental Airlines, Monday announced a merger deal worth $3.2 billion to create the world’s largest airline.
The combined company, which will fly under the United moniker and Continental logo, is now larger than Delta Air Lines, which became the country’s largest airline when it merged with Northwest Airlines in 2008.
It is expected to serve more than 144 million passengers per year and fly to 370 destinations in 59 countries. Continental already has several direct flights to India.
“Combining these two companies is the best way to position ourselves … to thrive in the changing and competitive airline,” said Jeff Smisek, chief executive of Continental, in a press conference with Glenn Tilton, chief executive of UAL Corp in New York.
“Continental is strong where United is weak; United is strong where Continental is weak. Putting these two carriers together is a match made in heaven,” he was quoted as saying by CNN.
As a result of the merger, the companies expect to have annual revenues of $29 billion and 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, CNN reported. 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 percent 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, a source cited by CNN said.
