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UAL Board Said to Approve Merger With Continental Air (Update1)

May 02, 2010, 4:00 PM EDT

By Mary Jane Credeur and Mary Schlangenstein

May 2 (Bloomberg) -- Directors at United Airlines parent UAL Corp. approved a merger with Continental Airlines Inc. that would create the world’s biggest carrier, a person familiar with the matter said.

Continental’s board will vote later today, said the person, who asked not to be identified because the details aren’t public.

The companies plan to announce a deal as early as tomorrow, people familiar with the situation have said.

United, the third-largest U.S. airline, and No. 4 Continental began talks last month on a combination, reviving negotiations that Houston-based Continental abandoned in April 2008. The terms call for an all-stock transaction, according to people familiar with the matter.

Jean Medina, a spokeswoman for Chicago-based UAL, didn’t immediately return messages seeking a comment. A message left with Continental’s media office wasn’t immediately returned.