The new United would surpass Delta Air Lines in size, which should help it attract more high-fare business travelers. It will fly to 370 destinations in 59 countries.
The companies insisted the deal is a merger of equals.
But United shareholders will hold a majority stake, the airline will be based in United's hometown of Chicago and it will be called United.
It would be run by current Continental CEO Jeffery Smisek, however. United CEO Glenn Tilton, a longtime advocate of consolidation in the airline industry, will be non-executive chairman for up to two years before Smisek adds the chairman title.
The new parent company will be called United Continental Holdings Inc., and have about $29 billion in annual revenue based on 2009 results and $7.4 billion in unrestricted cash. The airlines said combining would save them $1 billion to $1.2 billion a year by 2013, including between $800 million and $900 million in new yearly revenue.
The deal would create a giant with major hubs in key domestic markets including New York, Los Angeles, Chicago, Houston and San Francisco and an international network stretching from Shanghai to South America.
It will leave three big U.S. airlines with major international routes — the new United, Delta and American Airlines, with US Airways a distant fourth.
United is the nation's third-largest carrier by traffic, while Continental Airlines Inc., in Houston, is No. 4.
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