TWA, Pan Am, Eastern… and now Continental
As long expected, UAL is buying Continental Airlines for about $3.17 billion in stock, forming the world’s largest carrier and further shrinking the U.S. airline industry. It’s the biggest deal in the market since Delta’s 2008 purchase of Northwest, and retires another storied brand from the days when air travel was as much about glamor as it was about getting somewhere. The combined company will have 10 hubs, with Houston as its largest, and a workforce of nearly 90,000.
Continental Chief Executive Jeff Smisek will run the Chicago-based combined airline, but the brand will be UAL. The deal is expected to produce $1 billion to $1.2 billion in annual revenue and cost benefits for the combined company by 2013. One-time costs of about $1.2 billion are expected over a three-year period.
The companies expect to complete the transaction in the fourth quarter of 2010.
John Crawley reported late last week that while the deal should pass regulatory muster, the carriers should not expect a Justice Department review to be as swift Northwest’s, which was deliberately timed to be considered by the business-friendly Bush administration.