US monopoly regulators approve Continental-United merger

Aug 28, 2010, 0:14 GMT

New York - Federal monopoly regulators late Friday approved the proposed merger of US airlines United and Continental, removing a road block to the formation of the world's largest airline.

The two companies fly more than 144 million passengers a year to 370 destinations in 59 countries with limited overlaps. Chicago-based United Airlines Inc has a stronger presence across the US and the Pacific, while Houston-based Continental Airlines Inc focuses more on the north-eastern states, Europe and Latin America.

The US Justice Department's antitrust division said that it would not oppose the merger after conducting 'a thorough investigation' of the proposal. It found that the two airlines have 'largely complementary networks' that overlap mainly in non-stop routes to the airport in Newark, New Jersey, where Continental runs one of its hubs just outside New York City.

In response to the Justice Department's concerns about expanding Continental's already high market share in Newark, the merging airlines have agreed to transfer 18 daily round trips and other assets at Newark Liberty Airport to Southwest Airlines Co, an independent budget carrier.

The action will introduce Southwest's significant price and service competition to Newark and the broader New York commercial aviation market.

The slot transfer 'resolves the department's principal competition concerns and will likely significantly benefit consumers on overlap routes as well as on many other routes,' the antitrust division said in a statement.

The merger is slated to give 55 per cent of the company to United shareholders and 45 per cent to Continental shareholders in a 3- billion-dollar stock swap. The holding company for the new airline is to be called United Continental Holdings. The airline itself will go under the name of United but feature Continental's logo.

European Union monopoly regulators approved the merger last month.

Shareholders in both airlines must still vote for the deal.