Star Alliance carrier United Airlines and Continental Airlines have confirmed plans to merge, under a holding company known as United Continental Holdings. Both airlines today agreed to a $3 billion merger that will create the world's largest airline and will be based in Chicago, with Continental's Jeff Smisek serving as chief executive and United's Glenn Tilton as non-executive chairman.

Continental Airlines and United Airlines are expected to announce Monday that they are merging to form the world's largest airline, experts familiar with the matter said.

UAL's board of directors has met on Friday while Continental's board met both on Friday and Sunday to discuss the deal.

The growth in demand on international routes continues to be “much faster than anybody would have expected even six months ago,” IATA Director General and CEO Giovanni Bisignani said this week, as IATA released figures showing another strengthening in traffic in March.

Bisignani cautioned, however, that passenger and freight markets still are 1% below early 2008 highs.

American intends to furlough up to 175 pilots over the next six months, although it is negotiating with the pilots’ union to reduce the total through various voluntary options.

The carrier is talking with the Allied Pilots Association to “develop possible furlough mitigation.” The carrier is contractually obliged to offer a “stand-in-stead” program where pilots can volunteer to take the place of a furloughed colleague, an airline spokeswoman said. APA said it is “hoping to compel” American to offer voluntary leaves of absence and early retirement incentives to minimize the furlough numbers.

Below a 3d reconstruction of US Airways flight 1549, the flight that landed in the Hudson River piloted by Captain Sully Sullenberger and first officer Jeffrey B. Skiles.