United and Continental expected to announce merger next week

by Jessica MCILHINNEY on April 30, 2010

The world’s largest carrier will be formed when United Airlines and Continental Airlines merge after an agreement is announced Monday. Both airlines’ board of directors are expected to meet over the next few days to discuss the possibility of combining the carriers.

Two years ago, both carriers walked away from the same talks after falling-out during discussions. However, it is anticipated that the merger will take place this time. Negotiations began earlier this month, and are expected to be finalised in the coming days.

Both airlines are said the be already in agreement on various aspects of the deal including name and base for the surviving brand. United will retain its label should the merger continue and headquarters would be based in Chicago. If approved, the new firm will be larger than Delta Air Lines, which is currently the largest airline in terms of traffic.

Chairman and Chief Executive at Continental, Jeff Smisek is likely to be named as the chief executive for the newly formed carrier. United’s chief executive, Glenn Tilton, according to an insider, would stay-on as a non-executive chairman for at least two years at which time Mr Smisek will overtake that role as well.

However, it was reported that this week, both carriers faced a setback in talks when an agreement on shares could not be reached. Allegedly, United will look to pay for Continental regarding the stock-for-stock merger, but Continental wants the ‘unaffected share prices’ to be used. United is reported to be pushing for the use of later market prices.

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