United, Continental merging into No. 1 airline

United and Continental have been permitted to merge, a union that will create the world's largest airline. The two companies yesterday announced a new management lineup that puts Continental executives in choice spots, once the deal closes.

UAL says it is buying Continental in an all-stock deal worth $3.2 billion. If the deal wins U.S. government approval, the close is expected by year end. The new carrier will be known as United Airlines and be based in Chicago. The deal won regulatory approval from the European Commission yesterday.

The two airlines have said all along that the combined airline's CEO would be Continental chief Jeff Smisek, with United CEO Glenn Tilton as chairman.

Yesterday, they named the eight executives under Smisek: four from each airline.

UAL, parent of United Airlines, and Continental, said they have proposed naming Continental Chief Financial Officer Zane Rowe as CFO of the combined company. Continental labor chief Mike Bonds keeps his role, too.

The chief operations officer will be Pete McDonald, who has been with United since 1969. "The benches were deep on both sides," commented William Swelbar, an airline researcher at the Massachusetts Institute of Technology.

The two airlines also announced yesterday the departure of two top UAL executives. United Chief Financial Officer Kathryn Mikells and its President, John Tague, are both leaving after the deal closes.

Tilton brought in Tague in 2003 while United was restructuring under bankruptcy protection. Mikells has been with United since 1994, and was named chief financial officer in November 2008.

"The Mikells change surprised me quite a bit just given the remarkable job that she's done at United over the last couple of years and dealing with some very difficult liquidity issues," Swelbar said.

Other executives included Jeff Foland, who has been at United since 2005: He will lead the combined airline's frequent flier program. Jim Compton, who has been with Continental since 1995, will be chief marketing officer.

The new leadership team needs board approval to become official.