United and Continental Airlines said Monday they have agreed to form the world’s largest airline in a deal worth about $3 billion.
The new airline would jump past Delta Air Lines in size and have flights reaching from Shanghai to South America. That should lure more business travelers, who pay higher fares. The United name will live on, although the planes will have the Continental colors and logo.
The airline will be run by current Continental CEO Jeffery Smisek. United CEO Glenn Tilton, a longtime advocate of consolidation in the airline industry, will be chairman for up to two years, with Smisek taking over as chairman after that.
The deal will first need approval from shareholders and antitrust regulators. It’s expected to close in the fourth quarter.
The new parent company will be United Continental Holdings Inc. It will be based in United’s hometown of Chicago and its biggest hub will be Houston. The companies say the combined airline will have revenue of about $29 billion and $7.4 billion in unrestricted cash.