Report: United, Continental deal reached

NEW YORK, May 2 (UPI) -- United and Continental airlines agreed to an all-stock deal Sunday to merge into one air carrier, the world's largest, The New York Times reported.

The newspaper reported unidentified people it described as being familiar with the situation said the boards of both companies had approved the agreement, valued at $3 billion.

The transaction is expected to be announced Monday and close in the fourth quarter, the Times said.

While the merged carrier will be known as United and will be based in Chicago, it will be headed by Continental Chairman and Chief Executive Officer Jeffery Smisek, the newspaper said.

United Chairman Glenn Tilton will serve for two years as non-executive chairman, then Smisek will become the executive chairman.

A spokeswoman for United declined to comment and a representative for Continental, based in Houston, could not be immediately reached for comment.

The deal relegates Delta Air Lines, which became the No. 1 airline after its purchase of Northwest Airlines two years ago, to second place.

United-Continental would have a 21 percent share of the domestic market based on available-seat miles, compared with Delta's 20 percent share. American Airlines and Southwest Airlines each have 15 percent, and US Airways 10 percent.

Worldwide, the combined company will hold a 7 percent share, followed by Delta at 6 percent and American with 5 percent.