Continental and United Airlines to merge

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Tuesday, May 4, 2010

The new airline will be called United Airlines but use Continental livery (pictured)

Continental Airlines and United Airlines officially announced Monday their plans to merge after both companies' boards of directors approved the plan on Sunday afternoon. The joint company, branded as United Airlines, will take its livery from both airlines, acquiring the United name and using the Continental Globe and colors, giving it a co-branded look. This merger will allow Continental and United to surpass the recent Delta and Northwest merger, becoming the largest airline in the world when the merger is finalized.

The two airlines failed to reach an agreement on a separate merger several years ago when Continental dropped out of the talks. Some experts cited United's poor financial status as being one of the contributing factors for the breakdown in talks. This led United to begin merger talks with alliance partner US Airways, which also failed to come to fruition.

A Boeing 777 in United Airlines livery

The stock price of both companies rose when news of their merger was announced. Unlike most mergers, this one is relatively even in terms of what each company receives as a result. United Airlines is taking 55% control of the combined company and keeping its name, as well as becoming the main base for the group in Chicago. Continental’s Chief Executive Officer will become the CEO of the combined company, known as United Continental Holdings Inc, and will gain control of the other 45% of the new airline.

Since base operations are moving to Chicago, the city of Houston recently submitted proposals arguing for not cutting Continental’s over 1,000 jobs in Texas. Little has been said as to what will happen to regional carriers, like ExpressJet Airlines, that work closely with the two companies. For now, the companies will remain operating independently pending a United States Department of Justice anti-trust review which will set the stage for finalization of the merger later this year.