Continental and United form ‘mega-carrier’

Continental and United Airlines have announced plans to merge, the carriers announced Monday, creating the world’s largest airline by revenue and the largest combination cargo carrier among passenger airlines in North America.

The merger builds on the similar but slightly smaller merger last year of Delta Airlines and Northwest Airlines which was itself revolutionary because of its unprecedented scale at the time. European carriers have also been consolidating with Air France, KLM and Martinair for instance, now operating under one corporate umbrella and Lufthansa similarly bringing Swiss, British Midland and Austrian under its wing.

The all-stock deal will form a coast-tocoast American mega-carrier with a leading presence in the top domestic markets, including New York, Chicago and Los Angeles, along with an extended network to Asia, Latin America and Europe.

The airlines plan to complete the deal by end of this year but must still get the blessing of the Justice Department’s antitrust division. The merger also needs the crucial backing of employee unions, whose opposition to similar moves in the past has scuttled a number of potentialdeals.

The new airline will be named United Airlines, but the aircraft livery, logo and colours will be Continental. The two said they will keep the route structure for both carriers in place, with Continental’s existing hub at Houston as the main hub for the mega-carrier. The two are anticipating cost savings of nearly US$1billion.