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EU clears world's biggest airline merger

Brussels - European competition enforcers on Tuesday cleared a merger between US carriers United and Continental that will create the world's biggest airline.

The European Commission "concluded that the transaction would not significantly impede effective competition" in Europe, where the US airlines service a combined 35 destinations.

The new airline will fly under the United Airlines name and will hold around seven percent of global airline capacity. It has a market value of around $6.75bn.

The deal needs approval from shareholders of the two carriers as well as US anti-trust authorities, who turned down a United-US Airways deal in 2001.

"United and Continental's networks are complementary as they have hubs in different US cities," a statement from the commission said of their passenger transport interests.

"The proposed merger therefore only leads to small, incremental increases in the market shares of the parties," with only a "limited impact" on the air cargo transport sector.

Struggling with fallout from the worst recession in a generation, terrorism and costs brought on by an Icelandic volcano that forced the suspension of thousands of flights, airlines have been queuing up to join forces.

The deal, announced in May, follows Delta's 2008 takeover of Northwest and British Airways tying up with with Spanish carrier Iberia to avoid being sidelined by European rivals Air France-KLM and Lufthansa.

United and Continental said in announcing the deal that they hoped to generate annual savings and new revenues of up to $1.2bn by 2013.

The new airline will serve more than 144 million passengers per year with 370 destinations in 59 countries.

They are aiming to complete the transaction by the end of 2010.

  - AFP

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