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8-K - FORM 8-K - UNITED AIRLINES, INC. | h72680e8vk.htm |
EX-2.1 - EX-2.1 - UNITED AIRLINES, INC. | h72680exv2w1.htm |
Exhibit 99.1
Contacts for Continental:
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Contacts for United: | |
Media:
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Media: | |
Corporate Communications
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Worldwide Press Office | |
Phone: (713) 324-5080
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Phone: (312) 997-8640 | |
E-mail: corpcomm@coair.com
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Email: media.relations@united.com | |
Investors:
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Investors: | |
Investor Relations
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Investor Relations | |
Phone: (713) 324-5000
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Phone: (312) 997-8610 | |
E-mail: investorrelationsdept@coair.com
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E-mail: investorrelations@united.com |
UNITED AND CONTINENTAL ANNOUNCE MERGER OF EQUALS
TO CREATE WORLD-CLASS GLOBAL AIRLINE
TO CREATE WORLD-CLASS GLOBAL AIRLINE
Customers and Communities to Benefit from Greater, Easier Access to Worlds Most
Comprehensive Network; Preserves and Enhances Service to Small Communities
Comprehensive Network; Preserves and Enhances Service to Small Communities
Employees to Benefit from Enhanced Long-Term Career Opportunities and Greater
Stability as Part of Stronger Global Competitor
Stability as Part of Stronger Global Competitor
Shareholders to Benefit from Strong Financial Foundation, Expected Net Annual Synergies
of $1.0 Billion to $1.2 Billion and Sustainable Long-Term Value
of $1.0 Billion to $1.2 Billion and Sustainable Long-Term Value
Award-Winning Customer Service Combines With Industry-Leading
On-Time Performance
On-Time Performance
Industry-Leading Frequent Flyer Program Provides More Opportunities to
Earn and Redeem Miles Worldwide
Earn and Redeem Miles Worldwide
Existing Alliance Partnership Provides Platform for Smooth Integration
Name of Airline Will be United with Continentals Logo and Livery
HOUSTON AND CHICAGO, May 3, 2010 Continental (NYSE: CAL) and United (NASDAQ: UAUA) today
announced a definitive merger agreement, creating the worlds leading airline with superior service
to customers, expanded access to an unparalleled global network serving 370 destinations around the
world, enhanced long-term career prospects for employees, and a platform for improved profitability
and sustainable long-term value for shareholders. The all-stock merger of equals brings together
two of the worlds premier airlines,
creating a combined company well positioned to succeed in an increasingly competitive global
and domestic aviation industry.
Glenn Tilton, chairman, president and chief executive officer of UAL Corp., will serve as
non-executive chairman of the combined companys Board of Directors through December 31, 2012 or
the second anniversary of closing, whichever is later. Jeff Smisek, Continentals chairman,
president and chief executive officer, will be chief executive officer and a member of the Board of
Directors. He will also become executive chairman of the Board upon Tiltons ceasing to be
non-executive chairman.
The combined organization will draw on the talented group of leaders from both companies, and
key management positions will be determined prior to the transactions closing. The combined
companys management team is expected to include an equitable and balanced selection of executives
from each company with the intention that each company will contribute roughly equal numbers. In
addition to Smisek and Tilton, the 16-member Board of Directors will include six independent
directors from each of the two companies and two union directors required by Uniteds charter.
The holding company for the new entity will be named United Continental Holdings, Inc. and the
name of the airline will be United Airlines. The marketing brand will be a combination of the
brands of both companies. Aircraft will have the Continental livery, logo and colors with the
United name, and the announcement campaign slogan will be Lets Fly Together. The new companys
corporate and operational headquarters will be in Chicago and it will maintain a significant
presence in Houston, which will be the combined companys largest hub. Additionally, the CEO will
maintain offices in both Chicago and Houston.
Tilton said, Today is a great day for our customers, our employees, our shareholders and our
communities as we bring together our two companies in a merger of equals to create a world-class
and truly global airline with an unparalleled network serving communities worldwide with
outstanding customer service. 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. Knowing and respecting
our colleagues at Continental as we do, we are confident that together we can compete
successfully in what is now, clearly, a global marketplace.
Smisek said, This combination brings together the best of both organizations and cultures to
create a world-class airline with tremendous and enduring strengths. Together, we will have the
financial strength necessary to make critical investments to continue to improve our products and
services and to achieve and sustain profitability. We have forged a highly collaborative
partnership with United over the past two years as we prepared for and executed a seamless
transition to Star Alliance, an important achievement that gave us valuable experience in working
together and built mutual respect between our two companies. I look forward to working with the
employees of both companies around the world, so our airline can become an even stronger global
competitor, deliver sustainable profitability, achieve best-in-class customer service under our
unified brand, create long-term career opportunities and deliver increased value for shareholders.
The combination of United and Continental brings together the two most complementary networks
of any U.S. carriers, with minimal domestic and no international route overlaps. The combined
company will offer enhanced service to Asia, Europe, Latin America, Africa and the Middle East from
well-placed hubs on the East Coast, West Coast, and Southern and Midwestern regions of the United
States. The combined company will have 10 hubs, including hubs in the four largest cities in the
United States, and will provide enhanced service to underserved small- and medium-sized
communities. The combined carrier will continue to serve all the communities each carrier
currently serves. Together, Continental and United serve more than 144 million passengers per year
as they fly to 370 destinations in 59 countries.
Employees will benefit from improved long-term career opportunities and enhanced job stability
by being part of a larger, financially stronger and more geographically diverse carrier that is
better able to compete successfully in the global marketplace. The companies believe the effect of
the merger on front-line employees will be minimal, with reductions coming principally from
retirements, attrition and voluntary programs. The company will provide employees with
performance-based incentive compensation programs focused on achieving common goals. The combined
company will be focused on creating cooperative labor relations, including negotiating contracts
with collective bargaining units that are fair to the company and fair to the employee.
On a pro forma basis, the combined company would have annual revenues of approximately $29
billion based on 2009 financial results, and an unrestricted cash balance of approximately $7.4
billion as of the end of first quarter 2010, including Uniteds recently closed financing
transaction.
In the merger, Continental shareholders will receive 1.05 shares of United common stock for
each Continental common share they own. United shareholders would own approximately 55% of the
equity of the combined company and Continental shareholders would own approximately 45%, including
in-the-money convertible securities on an as-converted basis.
The merger is expected to deliver $1.0 billion to $1.2 billion in net annual synergies by
2013, including between $800 million and $900 million of incremental annual revenues, in large part
from expanded customer options resulting from the greater scope and scale of the network, and
additional international service enabled by the broader network of the combined carrier. Expected
synergies are in addition to the significant benefits derived from the companies existing alliance
and expected from their future joint venture relationships. The combined company is also expected
to realize between $200 million and $300 million of net cost synergies on a run-rate basis by 2013.
One-time costs related to the transaction are expected to total approximately $1.2 billion spread
over a three-year period.
The combined airline will have the most modern, fuel-efficient fleet (adjusted for cabin mix)
and the best new aircraft order book among major U.S. network carriers. It will have the financial
strength to enhance customers travel experience by enabling it to invest in globally competitive
products, upgrade technology, refurbish and replace older aircraft, and implement the best-in-class
practices of both airlines.
The merger will create the industrys leading frequent flyer program, offering vast
opportunities for customers to earn and redeem miles, including on Star Alliance partners.
United and Continental are members of Star Alliance, the worlds largest airline network.
Star Alliance customers will continue to benefit from service to over 1,000 destinations, more
connecting opportunities, additional scheduling flexibility and access to leading reciprocal
frequent flyer and airport lounge benefits with Star Alliances 24 other member airlines around the
world.
The merger, which has been approved unanimously by the Boards of Directors of both companies,
is conditioned on approval by the shareholders of both companies, receipt of
regulatory clearance, and customary closing conditions. The companies expect to complete the
transaction in the fourth quarter of 2010. During the period between signing and closing of the
merger, the CEOs of both companies will lead a transition team, which will develop a specific
integration plan.
J.P. Morgan Securities Inc. and Goldman, Sachs & Co. acted as financial advisors and provided
fairness opinions to United, and Lazard and Morgan Stanley acted as financial advisors and provided
fairness opinions to Continental. Jones Day, Vinson & Elkins LLP, and Freshfields Bruckhaus
Deringer LLP acted as legal advisors to Continental, and Cravath, Swaine & Moore LLP acted as legal
advisor to United.
Financial Community Webcast
The companies will host a webcast today at 8:30 a.m. EDT to discuss the merger. Participants
will include Glenn Tilton and Jeff Smisek. A slide presentation and the live audio webcast will be
available and archived on a new dedicated merger website at www.unitedcontinentalmerger.com
and will also be available on the investor relations section of each companys website.
B-Roll Information and Satellite Coordinates
B-roll footage will be available via satellite today until 12:00 pm EDT at the following
coordinates: (C-Band analog): Galaxy 16 : Trans. 23 : DF 4160 (H)
Trouble number for 5/3/2010 = 212-812-7149
Members of the media can also download broadcast quality b-roll video and high-resolution
images by going to the broadcast media center on www.unitedcontinentalmerger.com.
About Continental
Continental Airlines is the worlds fifth largest airline. Continental, together with
Continental Express and Continental Connection, has more than 2,700 daily departures throughout the
Americas, Europe and Asia, serving 132 domestic and 137 international destinations. Continental
is a member of Star Alliance, which overall offers 19,700 daily flights to 1,077 airports in 175
countries through its 26 member airlines. With more than 40,000
employees, Continental has hubs serving New York, Houston, Cleveland and Guam, and together
with its regional partners, carries approximately 63 million passengers per year.
Continental consistently earns awards and critical acclaim for both its operation and its
corporate culture. For nine consecutive years, FORTUNE magazine has ranked Continental as the top
U.S. airline on its Worlds Most Admired Companies airline industry list. For more company
information, go to continental.com.
About United
United Airlines, a wholly-owned subsidiary of UAL Corporation (Nasdaq: UAUA), operates
approximately 3,400* flights a day on United and United Express to more than 230 U.S. domestic and
international destinations from its hubs in Los Angeles, San Francisco, Denver, Chicago and
Washington, D.C. With key global air rights in the Asia-Pacific region, Europe and Latin America,
United is one of the largest international carriers based in the United States. United also is a
founding member of Star Alliance, which overall offers 19,700 daily flights to 1,077 airports in
175 countries through its 26 member airlines. Uniteds 46,000 employees reside in every U.S. state
and in many countries around the world. United ranked No. 1 in on-time performance for domestic
scheduled flights for 2009 among Americas five largest global carriers, as measured by the
Department of Transportation and published in the Air Travel Consumer Report for 2009. News
releases and other information about United can be found at the companys Web site at
united.com, and follow United on Twitter @UnitedAirlines.
According to preliminary industry results provided by the five largest U.S. global
carriers based on available seat miles, enplaned passengers or passenger revenue, United ranked
highest in on-time performance for domestic scheduled flights as measured by the U.S. DOT (flights
arriving within 14 minutes of scheduled arrival time) between January 1 and March 31, 2010, when
compared to such U.S. global carriers, which includes Delta (including its Northwest subsidiary),
American, Continental and US Airways.
* Based on Uniteds forward-looking flight schedule for January 2010 to December 2010.
Important Information For Investors And Stockholders
This communication does not constitute an offer to sell or the solicitation of an offer to buy
any securities or a solicitation of any vote or approval. The proposed merger of equals
transaction between UAL Corporation (UAL) and Continental Airlines, Inc. (Continental) will be
submitted to the respective stockholders of UAL and Continental for their consideration. UAL will
file with the Securities and Exchange Commission (SEC) a registration statement on Form S-4 that
will include a joint proxy statement of Continental and UAL that also constitutes a prospectus of
UAL. UAL and Continental also plan to file other documents with the SEC regarding the proposed
transaction. INVESTORS AND SECURITY HOLDERS OF
CONTINENTAL ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS
THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and stockholders
will be able to obtain free copies of the joint proxy statement/prospectus and other documents
containing important information about UAL and Continental, once such documents are filed with the
SEC, through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed
with the SEC by UAL will be available free of charge on UALs website at www.united.com under the
tab Investor Relations or by contacting UALs Investor Relations Department at (312) 997-8610.
Copies of the documents filed with the SEC by Continental will be available free of charge on
Continentals website at www.continental.com under the tab About Continental and then under the
tab Investor Relations or by contacting Continentals Investor Relations Department at (713)
324-5152.
UAL, Continental and certain of their respective directors and executive officers may be deemed to
be participants in the solicitation of proxies from the stockholders of Continental in connection
with the proposed transaction. Information about the directors and executive officers of
Continental is set forth in its proxy statement for its 2010 annual meeting of stockholders, which
was filed with the SEC on April 23, 2010. Information about the directors and executive officers
of UAL is set forth in its proxy statement for its 2010 annual meeting of stockholders, which was
filed with the SEC on April 30, 2010. These documents can be obtained free of charge from the
sources indicated above. Other information regarding the participants in the proxy solicitation
and a description of their direct and indirect interests, by security holdings or otherwise, will
be contained in the joint proxy statement/prospectus and other relevant materials to be filed with
the SEC when they become available.
Cautionary Statement Regarding Forward-Looking Statements
This communication contains forward-looking statements within the meaning of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 that are not limited to
historical facts, but reflect Continentals and UALs current beliefs, expectations or intentions
regarding future events. Words such as may, will, could, should, expect, plan,
project, intend, anticipate, believe, estimate, predict, potential, pursue,
target, continue, and similar expressions are intended to identify such forward-looking
statements. These forward-looking statements include, without limitation, Continentals and UALs
expectations with respect to the synergies, costs and other anticipated financial impacts of the
proposed transaction; future financial and operating results of the combined company; the combined
companys plans, objectives, expectations and intentions with respect to future operations and
services; approval of the proposed transaction by stockholders and by governmental regulatory
authorities; the satisfaction of the closing conditions to the proposed transaction; and the timing
of the completion of the proposed transaction.
All forward-looking statements involve significant risks and uncertainties that could cause actual
results to differ materially from those in the forward-looking statements, many of which are
generally outside the control of Continental and UAL and are difficult to predict. Examples of
such risks and uncertainties include, but are not limited to, (1) the possibility that the proposed
transaction is delayed or does not close, including due to the failure to receive required
stockholder or regulatory approvals, the taking of governmental action (including the passage of
legislation) to block the transaction, or the failure of other closing conditions, and (2) the
possibility that the expected synergies will not be realized, or will not be realized within the
expected time period, because of, among other things, significant volatility in the cost of
aircraft fuel, the high leverage and other significant capital commitments of Continental and UAL,
the ability to obtain financing and to refinance the combined companys debt, the ability of
Continental and UAL to maintain and utilize their respective net operating losses, the impact of
labor relations, global economic conditions, fluctuations in exchange rates, competitive actions
taken by other airlines, terrorist attacks, natural disasters, difficulties in integrating the two
airlines, the willingness of customers to travel by air, actions taken or conditions imposed by the
U.S. and foreign governments or other regulatory matters, excessive taxation, further industry
consolidation and changes in airlines alliances, the availability and cost of insurance and public
health threats.
UAL and Continental caution that the foregoing list of factors is not exclusive. Additional
information concerning these and other risk factors is contained in Continentals and UALs most
recently filed Annual Reports on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent
Current Reports on Form 8-K, and other SEC filings. All subsequent written and oral
forward-looking statements concerning Continental, UAL, the proposed transaction or other matters
and attributable to Continental or UAL or any person acting on their behalf are expressly qualified
in their entirety by the cautionary statements above. Neither Continental nor UAL undertakes any
obligation to publicly update any of these forward-looking statements to reflect events or
circumstances that may arise after the date hereof.
Note to Editors: Todays news release, along with other news about United and Continental, is
available on the Internet at www.united.com and www.continental.com, as well as
www.unitedcontinentalmerger.com.
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