September 17, 2010 / 5:23 PM / 9 years ago

UAL and Continental shareholders approve merger

ELK GROVE VILLAGE, Illinois (Reuters) - Shareholders of United Airlines parent UAL Corp UAUA.O and Continental Airlines Inc (CAL.N) approved the merger of the two companies on Friday to form the world’s largest air carrier.

A Continental Airlines plane is parked next to United Airlines planes at Chicago's O'Hare International Airport May 3, 2010. REUTERS/John Gress

More than 98 percent of the votes cast by Continental’s shareholders approved UAL’s $3.17 billion all-stock purchase of Continental during a special meeting in Houston. UAL investors approved the deal at a meeting in a suburb of Chicago.

“We would have a company that would be an investable company, a leading company and we’ve created what has every opportunity by almost every imaginable measure to be the best company in the industry,” UAL CEO Glenn Tilton said during the meeting.

UAL and Continental announced their merger in May, two years after Continental spurned similar advances from United.

The merger, which won antitrust approval from the U.S. government in August and got clearance from the European Commission in July, is expected to close by October 1.

The new carrier will be known as United Airlines and will be based in Chicago with Continental Chief Executive Officer Jeff Smisek as CEO. UAL CEO Glenn Tilton will become nonexecutive chairman of the carrier.

The deal is the first major U.S. airline merger since Delta Air Lines (DAL.N) acquired Northwest Airlines in 2008 and comes after the airline industry has been hammered by a surge in oil prices followed by a deep recession.

During the meeting, Tilton cited a need for more cross-border airline partnerships. He added that the airline industry is better able to match available seats for sale with passenger demand.

“From economic collapse to pandemic to 9/11 to volcanic ash, it’s an industry that is buffeted by forces beyond its control,” Tilton said. “Because of that, it’s going to require an industry of this resilience and this magnitude to weather all that.”

Continental shares fell 16 cents to $23.16 on the New York Stock Exchange early Friday afternoon. United stock dropped 18 cents to $22.04 on Nasdaq.

Reporting by Kyle Peterson in Elk Grove Village, Illinois, with added reporting by Deepa Seetharaman in New York; Editing by Lisa Von Ahn and Richard Chang

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