United Airlines and Continental Airlines have finalised a $US3 billion dollar deal that will transform the two carriers into the biggest airline in the aviation industry as both companies are looking to generate fresh revenues of up to $US1.2 billion or $A1.3 billion come 2013.

According to AAP, the new entity will enter the market with a market capitalisation of about $US6.75 billion or $A7.32 billion as it aims to maintain strong presence in Asia, Europe and Latin America, with seven percent of global airline capacity.

Delta, which used to dominate the industry when it bought Northwest Airlines in 2008, currently controls six percent of worldwide capacity.

The merger will require the approval of both carriers' shareholders and the US anti-trust authorities but Continental chief executive Jeff Smisek has expressed confidence that no antitrust questions will arise as the two companies "are increasing competition and are not reducing competition with more consumer choice better consumer choice."

He added that the giant merger would effectively lead to "a stronger, more efficient airline, both operationally and financially, better positioned to succeed in a highly competitive global aviation industry."

Airlines have been battling with recession, terrorism and crises events and the emergence of budget carriers had encouraged major companies to forge alliances and implement cost-cutting measures.

Mr Smisek noted that the combined companies each earned more than $US3 billion in 2009 but were also hit by losses, as he declared that the new entity will use its financial might to invest wisely, improve its products and services en route to a sustained profitability.

UAL Corporation president Glenn Tilton called the partnership as "a merger of equals to create a world-class and truly global airline with an unparalleled network," adding that boards of the two airlines had unanimously voted for the deal.

As agreed upon, Continental shareholders will get 1.05 shares of United stock for every Continental share with United shareholders owning about 55 percent of the equity while Continental shareholders will secure 45 percent.

Both companies are looking to wrap up negotiations by end of 2010 as pilots' union for both airlines sued for job security and pension guarantees notwithstanding that the company has yet to announce any plans of job cuts.

The new company is poised to serve 144 million passengers every year with 370 service routes in 59 countries, as it is projecting that annual revenues would peak to $US29 billion and cash balance would reach $US7.4 billion by March 2010.

The company is also planning to offer enhanced services in Asia, Europe, Latin America and the Middle East as it gave assurance that international route overlaps will not occur and domestic services cloning will be minimised as much as possible.