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United Airlines parent UAL Corp. and Continental Airlines Inc. agreed to merge.

United Airlines and Continental merge.

United Airlines parent UAL Corp. and Continental Airlines Inc. agreed to merge in a stock swap valued at more than $3.2 billion to create the world’s largest carrier, reviving a deal that fell apart two years ago.

United’s name and Chicago headquarters will be retained, while Continental Chief Executive Officer Jeff Smisek, 55, will become the CEO and United’s Glenn Tilton, 62, will be nonexecutive chairman, the companies said today in a statement. Each Continental share will be exchanged for 1.05 UAL shares.

United and Continental together would take the top spot in global traffic from Delta Air Lines Inc., and operate hubs in New York and Washington. Negotiations resumed last month after Continental pulled out of talks in April 2008 as fuel prices rose and the recession deepened.

“With the recovery of the economy, fuel prices moderating, capital markets opening and both companies having solid liquidity, it was the right time to get involved in merger discussions,” Smisek said today in an interview.

Tilton said he told UAL’s board: “Right deal, right time.” READ MORE HERE

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