UAL Corporation has completed its merger with Continental Airlines, Inc. to form United Continental Holdings, Inc., and Continental Airlines and United Airlines are now wholly owned subsidiaries of that company.
The common stock of United Continental Holdings, Inc. began trading on the New York Stock Exchange under the symbol UAL on October 1. When the two airlines are integrated under the United Airlines name (but with its fleet wearing a livery derived from that of Continental Airlines), United will be the largest airline in the world, taking over the mantle from Delta Air Lines.
United Continental Holdings, Inc. has named a 16-member board, which includes six independent directors from each of United and Continental. Two other directors are UAL Corporation CEO Glenn Tilton, who will serve as non-executive chairman of the United Continental Holdings board, and Continental Airlines CEO Jeff Smisek, who will serve as president and chief executive officer. The independent directors are Kirbyjon Caldwell, Carolyn Corvi, W. James Farrell, Jane Garvey, Walter Isaacson, Henry Meyer III, Oscar Munoz, James O’Connor, Laurence Simmons, David Vitale, John Walker and Charles Yamarone. Additionally, the board has two union directors, Stephen Canale and Captain Wendy Morse.
“This is a true merger of equals, bringing together two strong companies and positioning us to succeed in a dynamic and highly competitive global aviation industry. This sets us on a path to create the world’s leading airline from a position of strength, with one of the the industry’s best cash positions, industry-leading revenues and a competitive cost structure,” says Tilton.
“With great people, an unparalleled global network, the best new aircraft order book among U.S. network carriers and a commitment to superior products and services, United is well positioned for a bright future,” says Smisek.
With approximately $9 billion in unrestricted cash at closing, United Continental Holdings expects the merger will deliver $1.0 billion to $1.2 billion in net annual synergies by 2013. United Continental estimates the synergies will include $800 million to $900 million of additional annual revenue from expanded customer options resulting from the network’s greater scope and scale, as well as fleet optimization and expanded service enabled by the broader network. On a pro-forma basis, the combined company would have annual revenues of $31.4 billion, based on results for the 12 months ending June 30, 2010.
Continental and United, operating under United Continental Holdings, will immediately begin working to integrate the two companies fully. In the near term, customers can expect to interact with each carrier as they always have, United Continental says. Customers flying on Continental will continue to check in at continental.com, or at Continental kiosks and ticket counters, and to be assisted by Continental employees, and customers flying on United will continue to check in at united.com or at United kiosks or ticket counters, and to be assisted by United employees.
Customers will continue to earn and redeem frequent-flier miles through the respective loyalty programs of Continental and United until those programs are combined. The company expects that travelers will begin to see a more unified product in spring 2011, as the carriers integrate key customer-service and marketing activities to deliver a more seamless product.
“We have been moving quickly but thoughtfully on our integration planning, and I’m pleased with the progress we’ve made,” says Smisek. “We have a lot of hard work ahead as we begin to implement our integration plan, but our co-workers are enthusiastic about the opportunities this merger will bring to them.”
According to United Continental, the new company will create a platform for greater job stability, career opportunities, and retirement security for its employees by being part of a larger, financially stronger and more geographically diverse carrier that is better able to compete successfully in the global marketplace.
“Our outstanding team is the most important asset of the new airline,” says Smisek. “We will be working together to provide our co-workers with the right culture, tools and incentives to do their jobs well and to make them proud to work for the new United.”
The new company’s corporate and operational headquarters will be in Chicago, with a significant presence in Houston, the company’s largest hub.
As a result of the merger, Continental shareholders will receive 1.05 shares of United Continental Holdings, Inc. common stock for each share of Continental common stock previously held. UAL Corporation shareholders will now own approximately 55 per cent of the equity of the holding company and former Continental shareholders will now own approximately 45 per cent.