A merger deal has been in the offing for the past two years between Continental Airlines Incorporation (NYSE:CAL) and UAL Corporation’s (NASDAQ:UAUA) United Airlines. The two companies were almost at the verge of signing a treaty when Continental announced the last minute back off.

United Airlines is one of the world’s largest airlines based in the US. On June 19, 2008 CEOs of United Airlines and Continental Airlines signed an agreement which could possibly result in their amalgamation. This agreement was signed with the intent of sharing of technology, development of customer base and enhancement of international links, without much costs and restructuring involved.

In 2008, the merger negotiations started between both the companies. They waited for the merger of their rivals Delta Airlines and North West Airlines. But, Northwest Golden Shares in Continental ruled out any merger involving Continental and in the fear of these shares being transferred or redeemed, the company decided to stand alone thus, leaving the agreement. However, owing to an extended partnership, Continental had to leave Delta’s Skyteam Alliance to join United’s Star Alliance.

Nevertheless, after two years, United Airlines and Continental Airlines are again talking unionism to build revenue, capacity and facilitate air industry’s growth and clear labour problems too.

Both the companies have common pilot unions and less route overlap. They also have common partnership with star alliance.

US Airlines stock has risen about 9 percent after merger talks while Continental Airlines shares have jumped 15 percent.

It can be sensed that the merger will help in cutting costs and initially the fares will also increase. The pilot union may oppose the deal due to a jittery feeling of uncertain future but still the management of both the companies are trying to initiate collective bargaining so that the hurdles from union side can be overcome.

The combination of both airlines would be a win-win situation as this would lead to the formation of the largest airline company and will leave behind the rival firms. If Continental does not unite with United Airlines than it will have to satisfy itself with number four position.