| 8.9°C Belfast

US airline giants announce merger

US-based United Airlines and Continental Airlines have announced a merger deal that will create the world's largest airline.

Under the terms of a $3.2bn (£2.1bn) stock swap deal reached yesterday, the two carriers will join forces to create a company that will carry 144 million passengers a year to 370 destinations in 59 countries.

The company, which will combine the brands of both firms, will be called United Airlines and have its headquarters in United's current base, Chicago, while maintaining Continental's presence in Houston. The merger comes at a time of consolidation in the airline industry, which has been hit by the twin blows of soaring jet fuel costs and a rapid decline of passenger travel during the recession of the last two years.

Glenn Tilton, chief executive of United's parent company UAL said: "Building on our Star Alliance partnership, we are creating a stronger, more efficient airline, both operationally and financially, better positioned to succeed in a dynamic and highly competitive global aviation industry.

"This combination will provide a strong platform for sustainable, long-term value for shareholders, opportunities for employees, and more and better scheduled service and destinations for customers."

Later this month Continental Airlines will celebrate five years of flights between Belfast International and Newark in the US.

Continental Airlines' spokes-man in London Nick Britton said it would be "business as usual" for the airline's services into Belfast.

"The deal will combine networks that do not overlap at all, they are very complimentary. There will be no change to our transatlantic network, including Belfast, but instead passengers will have access to United's network too," he said.

The merger is expected to save the companies around $1bn to $1.2bn by 2013.

Both airlines made hefty losses last year, but combined they will surpass American Airlines as the world's largest carrier in terms of total passenger miles flown.

They did not give details of potential redundancies resulting from the deal.