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View Full Version : United will merge with Continental in deal worth $3 billion, creating world's largest airline



Zerozx
May 3rd, 2010, 06:46 AM
link: http://money.cnn.com/2010/05/03/news/companies/United_Continental_merge/index.htm


NEW YORK (CNNMoney.com) -- UAL Corp.'s United Airlines announced on Monday it will merge with Continental Airlines in a deal worth $3 billion, creating 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 (DAL, Fortune 500), 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.

"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," said Glenn Tilton, chairman, chief executive of UAL Corp., in a statement.

Under the terms of the deal, Continental shareholders will receive 1.05 shares of United common stock for each Continental common share they own, the companies said in a statement.

United shareholders would own approximately 55% of the combined company and Continental shareholders would own approximately 45%.

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. 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% 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, the source said.

Last month, United also discussed the possibility of merging with he Phoenix-based US Airways (LCC, Fortune 500).

Shares of UAL (UAUA, Fortune 500) were unchanged Friday while Continental's (CAL, Fortune 500) stock fell 1.5% Friday.

drjoshua
May 3rd, 2010, 08:49 AM
Corporations keep getting bigger and bigger...

Zerozx
May 3rd, 2010, 04:19 PM
Texas Gov. Rick Perry on Continental, United merger: We disagree with the decision to locate the headquarters in Chicago

kenny7758
May 3rd, 2010, 05:24 PM
will that become "Con-U Air" ?

Fable
May 3rd, 2010, 07:56 PM
I remember being in high school 20 years ago and my History professor telling me someday the world would have only one of everything...... Airline, bank, leader.........

cocopea9052
May 3rd, 2010, 09:25 PM
Mergers always result in job loss, it's a guarantee. My previous company went through 3 of them, and each time many of the duplicate high ranking posts were dropped. Also interesting that all while merger talks and plans are in the works, they already know who will be let go-- and sometimes it is those very folks right there negotiating with them. It's actually kinda cut-throat what goes on behind closed doors of companies planning mergers...

Then they strategically plan when they will let folks go...and that is based on things such as salaries, when quarterly reports come out, SEC filings, who is near retirement, etc., etc...job performance is actually one of the last things they look at....they call HR and have them start pulling personnel files....troublemakers are out, unless they have too much knowledge. They usually retain folks with lots of company history/insight....they also look at any unstable behavior, and even outside social relationships.

Anyway, just a bit about what goes on before the wonderful news is announced, cause they won't tell ya that stuff....:heh