* UAL, Continental close merger deal
* United displaces Delta as world's biggest carrier
* United Continental Holdings begins trade on Friday
* Stock symbol is UAL; shares launch at $25 then slip
(Adds new CEO quote, background)
By Kyle Peterson
CHICAGO, Oct 1 UAL Corp UAUA.O and
Continental Airlines Inc (CAL.N) closed their merger on Friday
to form the world's largest carrier, called United Airlines.
The airline is a unit of United Continental Holdings Inc
(UAL.N), the holding company formed under the $3.17 billion
all-stock merger, and began trading on the New York Stock
Exchange under the symbol "UAL" at $25 before slipping to
$24.44 by mid morning.
UAL Corp, the acquiring company, said the new 16-member
board of directors includes UAL Chief Executive Glenn Tilton,
as non-executive chairman, and Continental CEO Jeff Smisek, as
president and chief executive.
(For a graphic on airlines ranked by traffic and revenue,
The new United, based in Chicago, hopes its sprawling
domestic and international route network will win lucrative
corporate travel contracts.
"We believe we will be able to increase the mix of business
travelers because we can go to corporations and offer them a
very compelling proposition," Smisek told reporters on a
The airline industry has been battered in the last decade
by global terror concerns, economic weakness and volatile fuel
prices. Many experts say consolidation and capacity cuts are
the remedy. U.S. airlines slashed capacity starting in 2008.
Delta Air Lines (DAL.N), the world's largest carrier before
being displaced by United, had been No. 1 since 2008, when it
bought Northwest Airlines.
The new United and its region affiliates operate 5,800
flights a day to 371 airports, including to hubs in Chicago,
Cleveland, Denver, Guam, Houston, Los Angeles, Newark New
Jersey, New York, San Francisco, Tokyo and Washington, D.C.
The new company said it had $9 billion of unrestricted cash
at closing. Company executives have said the merger will
deliver $1 billion to $1.2 billion of annual cost and revenue
benefits by 2013.
The benefits will largely consist of $800 million to $900
million of incremental annual revenue, derived from the
expanded network and service, the company said.
United will continue to operate as two separate carriers
until it receives a single operating certificate, expected
within 18 months.
To achieve the promised cost and revenue benefits, the new
carrier must combine the 87,000 employees that make up the work
forces of UAL and Continental. Each of the pre-merger carriers
was heavily unionized and negotiations are under way to
UAL and Continental held merger talks in 2008 and came
close to merging before Continental walked away because of
concerns about UAL's finances. The two carriers later formed a
partnership within the global Star Alliance.
The new United's independent directors are Kirbyjon
Caldwell, Carolyn Corvi, James Farrell, Jane Garvey, Walter
Isaacson, Henry Meyer, Oscar Munoz, James O'Connor, Laurence
Simmons, David Vitale, John Walker and Charles Yamarone.
The board also has two union directors, Stephen Canale and
(Reporting by Kyle Peterson; Editing by Gerald E. McCormick
and Steve Orlofsky)