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May 3, 2010    

United and Continental Airlines in merger

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by Kay Murchie

The world’s largest carrier has been created via a merger between United Airlines and Continental Airlines, as consolidation spreads throughout the industry.

The two US airlines expect the merger to deliver savings of more than $1 billion a year.

The deal, which is worth $3.2 billion (£2.1 billion), will see a company that will carry 144 million passengers each year.

Glenn Tilton, United chief executive, who will become non-executive chairman of the new airline, comments: “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.”

Meanwhile, head of Continental, Jeff Smisek, will be chief executive of the new company, which will be based in Chicago.

The two companies currently have a total headcount of approximately 86,000 but potential job cuts were not discussed.

The airlines did say however, that they expect front-line employees to be “minimally affected by the merger”, with job cuts coming from retirements and voluntary redundancy.

The merger is set to be finalised by the end of 2010 but will require the approval of shareholders and competition regulators.

The news comes just one month after British Airways (BA) and Spanish airline Iberia signed a deal to merge their operations.

The airline industry has been battered by the recession, forcing many airlines into widespread consolidation.

Earlier this year, the International Air Transport Association (IATA) said 2009 saw the biggest decline in air passenger traffic since the aftermath of World War II.

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