A Report on Merger & Acquisition of United Airlines & Continental Airlines

Submitted toMr. Soumen Mukherjee

ByAmit Kumar

Points to be covered……………

1.Compulsion/Attractiveness of the Deal 2.View on success/Failure of the deal 3. Way Forward

A comparative Introduction……………............................Organization United Airlines Continental Airlines United Continental

Holdings

Founded April,1926 July,1934 May 2010

Headquater Chicago,USA Houston,USA Chicago USA

Revenue(FY 09-10) $ 16.335 billions(Annual Report 2009)

$ 12.586 billions(Annual Report 2009)

$ 23.229 billions(Annual Report 2010)

Operating Income $(161)millions-FY2009,$(4438)millions-FY2008

$ (146)millions FY 2009,$(314) millions FY2008

$ 976 millions

Passenger (In millions)

55,083 45,573 100,656

Presence Pacific Region,Europe,Latin America

Europe,Asia,Canada,Mexico,Latin America

Africa,Europe,Latin America,Asia,Canada,Mexico

Flight in a day 3300 3000 5700

Route map of Continental Airlines in 2009

Route map of United Airlines in 2009

Structure of deal & Attractiveness….

1. To effect the merger, Continental shareholders received 1.05 shares of UAL stock for each Continental share; at the time of closing, it was estimated that United shareholders owned 55% of the merged entity and Continental shareholders owned 45%.

2. The U.S. Department of Justice approved the $3 billion merger and shareholders of both the companies approved the merger on September 17, 2010

3. This deal created 2nd Largest Airlines & covered 15.9% of Domestic Market & 12% of International market.

http://www.transtats.bts.gov/-----Reference

Operational Structure……

Together United and Continental currently fly to 370 destinations worldwide, flying 144 million passengers a year, compare to Delta Airlines, flying 163million passenger a year to 337 destinations

My View on Success/Failure of deal…..

• Both companies are full-service airlines and have faced intense competition from low-cost operators

• United Airlines' parent company UAL reported a loss of $82m for the first three months of the year, after reporting a $1.1bn loss for 2009

• Continental reported net losses of $282m last year

• My View-Combining the two companies will create the world's biggest airline, based on the total number of passenger-miles flown

• Deal deliver savings of more than $1bn a year

• The companies did not cut potential jobs , but said they expected front-line employees to be "minimally affected by the merger", with staff reductions coming from retirements and voluntary redundancy

Way Forward….• The Company has taken significant steps towards the operational

integration of United & Continental

• The company has begun to optimize the gauge & frequency of its fleet in order to meet travel demand & capitalize on its combined global network efficiently

• Additional revenue generating & cost saving measures

Thank You!