In what they described as "a merger of equals," Continental Airlines and United Airlines today announced the two companies will combine in an all-stock transaction in which Continental shareholders will receive 1.05 shares of United common stock for each CO share they own.

United shareholders will own approximately 55% of the combined holding company, which will be named United Continental Holdings with United the name of the surviving airline. The transaction has a "combined value of over $8 billion," the companies said.

UAL Chairman, President and CEO Glenn Tilton will serve as nonexecutive chairman of the board of United Continental through Dec. 31, 2012, or the second anniversary of the deal's closing. CO Chairman, President and CEO Jeff Smisek will be CEO and will add the title of executive chairman upon Tilton's ceasing to be nonexecutive chairman.

In addition to Smisek and Tilton, the 16-member board will include six independent directors from each of the two companies and two union directors, required under United's charter. In a statement, the companies said that the management team "is expected to include an equitable and balanced selection of executives from each company with the intention that each…will contribute roughly equal numbers."

Corporate and operational headquarters will be in Chicago, current HQ to UA, which is approximately 30% larger than CO based on 2009 annual revenues of $16.3 billion versus $12.6 billion for CO. Houston-based CO flew 79.8 billion RPMs in 2009 versus 100.5 billion for UA. Based on 2009 results, the merged carrier will be slightly larger than Delta Air Lines ($28.1 billion in revenues last year).

The companies expect synergies of $1-$1.2 billion annually by 2013 including $800-$900 million of incremental annual revenues and $200-$300 million in net cost synergies. One-time merger costs are expected to total $1.2 billion spread over a three-year period.