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UAL wins antitrust approval to buy Continental


By Deepa Seetharaman
NEW YORK | Fri Aug 27, 2010 8:33pm EDT
(Reuters) - United Airlines won U.S. antitrust approval to buy Continental Airlines CAL.N on Friday, throwing a sweetener to rival Southwest Airlines (LUV.N) to allow the creation of the world's largest carrier.

United and Continental struck a deal to give Southwest some take-off and landing rights at a key airport hub, Newark Liberty International Airport near New York City, to get the go-ahead from the U.S. Justice Department -- a decision that came sooner than industry insiders had expected.

Despite the swift antitrust review, integrating the carriers is much more complex and time-consuming, and consumers are not likely to see any major changes immediately.

Continental and UAL scheduled special stockholder meetings on September 17 for approval of the merger and expect the deal to close by October 1. The deal won clearance from the European Commission in July.

United parent UAL Corp UAUA.O had announced in May that it would buy Continental for $3.17 billion in an all-stock deal. The combined carrier would be known as United Airlines and be based in Chicago, with Continental Chief Executive Jeff Smisek as CEO.

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.

The combined carrier would attract more business traffic because the company would fly to 370 destinations, the airlines have said. The merger is expected to produce between $1 billion to $1.2 billion in annual revenue and cost benefits by 2013.

The Justice Department's decision came less than two hours after the two merging airlines announced they would give up 36 slots at Newark Liberty to Southwest.