United Airlines and Continental Airlines announced yesterday that they had agreed to merge to create the world’s biggest carrier.
Under the agreement, Continental shareholders will receive 1.05 shares of United common stock for each Continental common share they own.
United shareholders would own approximately 55 percent of the equity of the combined company and Continental shareholders would own approximately 45 percent, including convertible securities.
The combined company would have annual revenues of approximately US$29 billion and an unrestricted cash balance of approximately US$7.4 billion as of the end of the first quarter of this year, officials said.
The merger is expected to deliver between US$1 billion and US$1.2 billion in net annual gains by 2013, including between US$800 million and US$900 million of incremental annual revenues, the companies projected.
The Wall Street Journal said United’s board met on Friday to vote on the deal, while Continental’s board voted on Sunday to approve it.
The new company would retain the United name and keep the corporate headquarters of the Chicago-based airline, said the New York Times, which also said — citing sources close to the deal — that the transaction was expected to close in the fourth quarter of this year.
United chief executive Glenn Tilton is to become non-executive chairman of the board of the new company for a two-year term. Houston, Texas-based Continental chief executive Jeff Smisek is to be the chairman of the new carrier.
The Times said the combination of the two firms would have a 21 percent share of the domestic US air industry and 7 percent of global capacity — ahead of US airline Delta that currently leads with 6 percent.
The merger, the Journal said, would give passengers of the two airlines access to many new destinations, as United serves 100 cities that Continental does not and Continental flies to 136 cities that United does not.
The transaction could be readying for greater scrutiny, however, from the US government because of the proposed size of the deal, the financial daily said, due to US President Barack Obama’s administration’s vow to “reinvigorate” antitrust enforcement.
The merger comes after US Airways broke off merger talks with United last month, but said it expected consolidation of the fragmented airline sector in the near future.
The two groups had explored a tie-up as airlines grapple with the effects of high fuel prices, growing competition from low-cost carriers and a slump in traffic amid economic recession in many parts of the world last year.
The United-Continental merger is also being seen as a way for the airlines to maintain economic stability in a downturning industry, as was seen by British Airways in the efforts to reclaim ground with the Spanish carrier Iberia tie-up to avoid being sidelined by rivals Air France-KLM and Lufthansa.
TYPHOON: The storm’s path indicates a high possibility of Krathon making landfall in Pingtung County, depending on when the storm turns north, the CWA said Typhoon Krathon is strengthening and is more likely to make landfall in Taiwan, the Central Weather Administration (CWA) said in a forecast released yesterday afternoon. As of 2pm yesterday, the CWA’s updated sea warning for Krathon showed that the storm was about 430km southeast of Oluanpi (鵝鑾鼻), Taiwan’s southernmost point. It was moving in west-northwest at 9kph, with maximum sustained winds of 119kph and gusts of up to 155kph, CWA data showed. Krathon is expected to move further west before turning north tomorrow, CWA forecaster Wu Wan-hua (伍婉華) said. The CWA’s latest forecast and other countries’ projections of the storm’s path indicate a higher
SLOW-MOVING STORM: The typhoon has started moving north, but at a very slow pace, adding uncertainty to the extent of its impact on the nation Work and classes have been canceled across the nation today because of Typhoon Krathon, with residents in the south advised to brace for winds that could reach force 17 on the Beaufort scale as the Central Weather Administration (CWA) forecast that the storm would make landfall there. Force 17 wind with speeds of 56.1 to 61.2 meters per second, the highest number on the Beaufort scale, rarely occur and could cause serious damage. Krathon could be the second typhoon to land in southwestern Taiwan, following typhoon Elsie in 1996, CWA records showed. As of 8pm yesterday, the typhoon’s center was 180km
TYPHOON DAY: Taitung, Pingtung, Tainan, Chiayi, Hualien and Kaohsiung canceled work and classes today. The storm is to start moving north this afternoon The outer rim of Typhoon Krathon made landfall in Taitung County and the Hengchun Peninsula (恆春半島) at about noon yesterday, the Central Weather Administration (CWA) said, adding that the eye of the storm was expected to hit land tomorrow. The CWA at 2:30pm yesterday issued a land alert for Krathon after issuing a sea alert on Sunday. It also expanded the scope of the sea alert to include waters north of Taiwan Strait, in addition to its south, from the Bashi Channel to the Pratas Islands (Dongsha Islands, 東沙群島). As of 6pm yesterday, the typhoon’s center was 160km south of
STILL DANGEROUS: The typhoon was expected to weaken, but it would still maintain its structure, with high winds and heavy rain, the weather agency said One person had died amid heavy winds and rain brought by Typhoon Krathon, while 70 were injured and two people were unaccounted for, the Central Emergency Operation Center said yesterday, while work and classes have been canceled nationwide today for the second day. The Hualien County Fire Department said that a man in his 70s had fallen to his death at about 11am on Tuesday while trimming a tree at his home in Shoufeng Township (壽豐). Meanwhile, the Yunlin County Fire Department received a report of a person falling into the sea at about 1pm on Tuesday, but had to suspend search-and-rescue
RSS