Continental Airlines and UAL Corporation's United Airlines are expected to announce next week that they are combining operations to form the world's largest airline. United's board is expected to vote on the deal on Friday, which was reached in less than three weeks.
Continental directors too are meeting today to review the transaction's terms and are expected to vote Sunday, the Chicago Tribune said.
The announcement could come on Monday. Continental has already agreed to allow the combined airline to be based in United's home base of Chicago and to retain the United name.
The transaction, which is still to be approved by both airlines' boards, would be structured as a merger of equals, with neither side paying a premium for the other's stock, the paper said.
Continental entered into talks with United earlier this month on the condition that new Continental CEO Jeff Smisek head the merged entity, sources said. United CEO Glenn Tilton, 62, is expected to be named non-executive chairman of the new airline and would serve on its board through a two-year transition period.
The rest of the management team will be named later by Smisek. United's reputation was badly battered during its three-year bankruptcy last decade that also damaged the morale of employees, who took steep pay cuts and gave up their pensions to ensure the carrier's survival.
However, over the past two years, United has placed greater emphasis on pleasing customers. Continental, however, sets the bar for service among large domestic carriers, receiving the highest marks from passengers in Zagat's 2009 Airline Survey.
The Continental and United brands will likely remain in the market until the carrier receives a single operating certificate from the Federal Aviation Administration (FAA), a process that took the recently merged Delta and Northwest Airlines two years to accomplish.
"Over that time, Smisek and his team plans to work hard to ensure there is a uniform level of service at the new United," a source said.
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