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FIRST ON CNBC: CNBC TRANSCRIPT: CNBC'S PHIL LEBEAU SITS DOWN WITH GLENN TILTON, CHAIRMAN, PRESIDENT AND CEO OF UAL CORP. AND JEFF SMISEK, CHAIRMAN, PRESIDENT AND CEO OF CONTINENTAL, TODAY, MONDAY, MAY 3RD AT 7:05AM ET ON CNBC'S "SQUAWK BOX"

WHEN: MONDAY, MAY 3RD AT 7:05AM ET

WHERE: CNBC'S "SQUAWK BOX"

Following is the unofficial transcript of a FIRST ON CNBC interview with Glenn Tilton, chairman, president and chief executive officer of UAL Corp. and Jeff Smisek, Continental chairman, president and chief executive officer discussing the merger announced this morning.

Watch a Video Airline CEOs on Merger

CNBC's Phil LeBeau discusses the United-Continental airline merger with Continental Airlines CEO Jeffery Smisek and United CEO Glenn Tilton.

KERNEN: WE'VE GOT CONTINENTAL AND UAL CLEARED FOR TAKEOFF. HE COMPANIES AGREEING TO A $3.2BILLION MERGER TO CREATE THE WORLD'S LARGEST CARRIER AND CNBC'S PHIL LEBEAU IS IN NEW YORK WITH A FIRST CNBC INTERVIEW WITH THE BETROTHED, THE TWO ENGAGED PARTIES, HERE.THEY'RE BOTH GLOWING, PHIL, THAT'S NICE WHEN IT HAPPENS, ISN'T IT, PHIL? ROMANTIC?

LEBEAU: I DON'T KNOW IF ROMANTIC IS THE RIGHT WORD

BOND: IT IS ROMANTIC

LEBEAU: THEY'RE GIDDY.

KERNEN: COME PHIL GET A LITTLE HUMOR PHIL

SMISEK: HE'S A REALLY GOOD-LOOKING GUY, ISN'T HE.

TILTON: PHIL'S BLUSHING.

LEBEAU: AN AWKWARD INTRODUCTION, JOE.

KERNEN: ONLY FOR YOU, THEY SEEM FINE. ANYWAY, GO AHEAD.

LEBEAU: ANYHOW, I'M JOINED BY GLEN TILLTON, THE CEO OF UAL AND JEFF SMISEK CEO OF CONTINENTAL AIRLINES. BUT THEY'RE TOGETHER NOW UNDER ONE BANNER THE NEW UNITED AIRLINES WHICH BY THE WAY HAS THE CONTINENTAL LOGO LET'S BEGIN BY HOW THE DEAL CAME TOGETHER, GLEN, HOW QUICKLY WAS IT THAT JEFF REACHED OUT TO YOU AS YOU WERE HAVING THE DISCUSSIONS WITH US AIR AND YOU DECIDED, LET'S MAKE THIS HAPPEN?

TILTON: SO JEFF CALLED ME, PHIL, ON MY BIRTHDAY, THE 9th OF APRIL. IT WAS A TERRIFIC BIRTHDAY PRESENT AND WE MOVED EXTRAORDINARILY QUICKLY FROM THAT CALL, WHICH I TOOK IN SANTA FE, NEW MEXICO, TO CHAT WITH YOU HERE TODAY.

LEBEAU: AND JEFF, FROM YOUR PERSPECTIVE, DID YOU CALL ONCE THE WORD CAME OUT ABOUT THE UNITED-US AIR TALKS?AND HOW QUICKLY DID GLEN SAY, IF WE'RE GOING TO DO SOMETHING, WE HAVE TO MOVE?

SMISEK: YES, I DID. LOOK, UNITED HAS ALWAYS BEEN A GOOD STRATEGIC PARTNER FOR CONTINENTAL. AND WE LOOK TO GET TOGETHER IN 2008, THE STARS WERE NOT ALIGNED IN TERMS OF THE FINANCIAL MARKETS. THE PERFORMANCE OF THE COMPANIES. THE LIQUIDITY. CAPITAL MARKETS, THE STARS WERE ALIGNED THIS TIME WHEN I SAW THAT HE WAS DISCUSSING A POTENTIALLY MERGING WITH ANOTHERPARTY, I KNEW I WAS A MUCH PRETTIER GIRL. SO I GAVE HIM A CALL. AND WE MOVED SWIFTLY. AND IT'S A PERFECT FIT. THESE COMPANIES FIT TOGETHER IN SUCH AN EXTRAORDINARILY COMPLEMENTARY WAY. THIS IS A MATCH TRULY MADE IN HEAVEN.

LEBEAU: GLEN YOU WERE POINTING OUT EARLIER, WE TALKED ABOUT THIS IN THE PAST, A LOT OF THE LEG WORK HAS ALREADY BEEN DONE BECAUSE OF THE ALLIANCE YOU FORMED IN GETTING THE APPROVAL THAT YOU'VE HAD, FROM EUROPEAN REGULATORS AND OTHERS IN TERMS OF WHAT CONTINENTAL AND UNITED ALREADY DO, CORRECT?

TILTON: RIGHT. SO WE'VE BEEN PARTNERS NOW FOR TWO YEARS. SO ON THE --

LEBEAU: IN A STRATEGIC ALLIANCE.

TILTON: YES.AND WITH CONTINENTAL HAVING MOVED OUT OF SKY TEAM AND INTO THE STAR ALLIANCE, THE MANAGEMENT TEAMS HAVE COME TO KNOW EACH OTHER VERY WELL. THE SYNERGIES THAT WE'RE PRESENTING TO THE MARKETPLACE TODAY ARE INCREMENTAL TO THOSE THAT WE HAVE ALREADY REALIZED IN PARTNERSHIP SO THE TIMING HERE REALLY HAS ALLOWED FOR A TWO-YEAR RAMP-UP TO THE DECISION THAT WE MADE VERY RECENTLY.

SMISEK: IF I COULD ADD TO THAT, OVER THAT PERIOD AS WE'VE TRANSITIONED FROM OUR FORMER ALLIANCE TO THE STAR ALLIANCE, WE HAVE GOTTEN TO KNOW EACH OTHER VERY WELL. OUR MANAGEMENT TEAMS HAVE GOTTEN TO KNOW AND RESPECT EACH OTHER. MANY OF OUR CO-WORKERS KNOW EACH OTHER.SO IT HELPED THE PROCESS A GREAT DEAL.

LEBEAU: IN A SENSE BECAUSE YOU'VE ALREADY HAD SOME OF THIS APPROVAL IN THE ALLIANCE, IT'S ALMOST A FULL MERGER, IF YOU WILL.WHICH SETS THE STAGE WHY YOU BELIEVE THAT THERE'S NO OVERLAP HERE. IN YOUR OPINION, THIS SHOULD GET REGULATORY APPROVAL?

TILTON: ABSOLUTELY. WE HAVE NO GOOD INTERNATIONAL OVERLAP AND OUR DOMESTIC OVERLAP IS VERY MINOR AND WE HAVE SUBSTANTIAL COMPETITION IN ALL THE OVERLAP MARKETS.THIS SHOULD HAVE NO MATERIAL ANTITRUST ISSUES WHATSOEVER.

SMISEK: A PERFECTLY COMPLEMENTARY NETWORK.

LEBEAU: HOW MUCH DOES THIS HELP UNITED IN TERMS OF THAT CORPORATE CUSTOMER?I MEAN, YOU ALREADY HAD A GLOBALPRESENCE.AND WERE ONE OF THE STRONGEST AIRLINES IN THE WORLD. BUT YOU HAVE TO ADMIT THAT THERE WERE HOLES WITHIN THE OVERALL NETWORK.

TILTON: PHIL, RIGHT HERE, NEW YORK. WHAT THIS DELIVERS TO THE NEW COMPANY, IS THE COMBINATION OF THE NEW YORK CORPORATE MARKET, CHICAGO, SAN FRANCISCO, HOUSTON, WASHINGTON, CLEVELAND, L.A. I MEAN, HUGELY POWERFUL. ALL OF THOSE COMPANIES THAT ARE HEADQUARTERED IN ALL OF THOSE CITIES, NOW HAVE AN AIRLINE THAT CAN TAKE THEM ANYWHERE IN THE WORLD.

SMISEK: THINK OF THE BREADTH OF THE SCOPE AND THE SCALE OF THIS NETWORK, WITH 370 DESTINATIONS, TEN HUBS.WE ARE ONE-STOP SHOPPING FOR ANY CORPORATION. SO WE WILL ATTRACT GREAT HIGH-YIELD CORPORATE CUSTOMERS.IT'S A GREAT SERVICE.

LEBEAU: YOU SAY YOU'RE GOING TO GET $1 BILLION IN ANNUAL SYNERGIES OUT OF THIS. WHERE DOES IT COME FROM?

SMISEK: IT COMES PRINCIPALLY FROM THE NETWORK. FROM OPTIMIZING THE NETWORK. PUTTING THE RIGHT-SIZED AIRCRAFT IN THE RIGHT-SIZED MARKET. ATTRACTING CORPORATE CUSTOMERS. THE PRESENCE THAT WE GET WHERE EACH ONE OF US IN A PARTICULAR SPOKE CITY IS RELATIVELY MODEST. TOGETHER WE HAVE MUCH MORE PRESENCE. WE'LL GENERATE A LOT OF REVENUE.

LEBEAU: I'VE BEEN TALKING WITH A FEW PEOPLE IN THE INDUSTRY AND THEY'VE MADE IT VERY CLEAR, THATWHEN YOU LOOK AT THE BIGGEST THREAT THAT EACH OF YOUR AIRLINES FACED SEPARATELY, ONE OF THE THINGS THEY BROUGHT UP WAS, LOOK AT THE NEW DELTA.THAT IT HAS BEEN MORE EFFECTIVE AT WINNING OVER THOSE CORPORATE CUSTOMERS.DO YOU NOW HAVE THE POWER, IF YOU WILL, TO SAY TO THE CORPORATE CUSTOMER -- HEY, WE CAN DO AS WELL AS THEM, IF NOT BETTER?

TILTON: ONE INTERESTING THING, YOU KNOW, PHIL, UNITED DIDN'T COMPETE WITH THE NEW DELTA, BECAUSE WE DIDN'T HAVE THE PRESENCE THAT WE NEEDED. THAT CONTINENTAL DELIVERS TO THENEW COMPANY. SO WE REALLY WEREN'T THREATENED IN THE PACIFIC, WE WEREN'T THREATENED IN CHICAGO. SO OUR CORPORATE CUSTOMERS HAVE BEEN VERY, VERY SOLID, VERY STICKY. I THINK NOW THE CONTINENTAL TEAM BRINGS THOSE CORPORATE CUSTOMERS THAT ARE IN THE KEY HUBS OF HOUSTON AND NEWARK, AND REALLY ROUNDS OUT THE UNITED PROPOSITION OF CORPORATE CUSTOMERS.

SMISEK: I WOULD ADD TO THAT, THE WAY THAT THIS COMPANY WILL OPERATE AND THE CULTURE THIS COMPANY WILL HAVE, AND THE HIGH-QUALITY SERVICE THAT IT WILL OFFER, I THINK WILL BE VERY ATTRACTIVE TOCORPORATE CUSTOMERS AND GENERAL CONSUMERS.

LEBEAU: JEFF, MUCH WAS MADE OF TWO YEARS AGO, WHEN YOU GUYS WERE ONTHE VERGE OF ANNOUNCING A MERGER.CONTINENTAL'S BOARD SAYS WE'RE NOT COMFORTABLE WITH WHAT WE'RE LOOKING AT RIGHT NOW, FOR A VARIETY OF FACTORS. ONE THING PLAYED UP WAS CONTINENTAL DID NOT BELIEVE THAT UNITED HAD THE OPERATIONAL EXCELLENCE THAT THEY WANTED AT THAT TIME. WHAT'S CHANGED SINCE THEN?OR WAS THAT STORY SO TO SPEAK, PLAYED UP INTO SOMETHING MORE THAN IT REALLY WAS?

SMISEK: WELL THERE WERE A NUMBER OF FACTORS. IN 2008 THE ECONOMY WAS ON THE BRINK OF THE GREATEST RECESSION SINCE THE GLOBAL DEPRESSION. FUEL PRICES WERE SKYROCKETING.THERE WAS LIMITED ACCESS TO LIQUIDITY. THE CAPITAL MARKETS WERE DISTRESSED.IF YOU CONTRAST IT WITH TODAY, WITH THE ECONOMY IN AN UPSWING AND ACCESS TO BETTER LIQUIDITY FOR BOTH OF OUR COMPANIES, BETTER FINANCIAL PERFORMANCE. AND OPERATIONALLY, UNITED HAS DONE A REALLY GOOD JOB, GLEN AND HIS TEAM HAVE DONE A VERY GOOD JOB -- NUMBER ONE IN ON TIME. I MUST SAY I ADMIRE HIM FOR IT.

LEBEAU: WE'VE ALREADY HAD PEOPLE OUTSIDE, SOMEBODY STOPPED ME ON THE STREET AND SAID, WHAT HAPPENS TO MY FREQUENT FLYER MILES. DOES ANYTHING CHANGE AT ALL?

TILTON: IT JUST GETS BETTER. WE'RE GOING TO HAVE THE LARGEST LOYALTY PROGRAM IN THE WORLD HERE.AND IF YOU'RE AN ELITE ON UNITEDOR ELITE ON US, YOU'LL BE AN ELITE ON THE COMBINED CARRIER.THERE WILL BE MORE OPTIONS TO REDEEM MILES AND EARN MILES.IT WILL BE BETTER FOR THE CUSTOMER.

LEBEAU: THE "SQUAWK"-ERS HAVE A QUESTION.

KERNEN: SENATOR KIT BOND.SENATOR?

BOND: GOOD MORNING, GENTLEMEN, CONGRATULATIONS ON YOUR COMBINATION.

TILTON: THANK YOU, SENATOR, THANK YOU VERY MUCH.

BOND: I KNOW THAT THESE DIFFICULT TIMES, YOU CAN GET A LOT OF BENEFITS BY COMBINING.BUT AND SERVING IN ST. LOUIS, WEKNOW THAT THESE AIRLINE MERGERS SOMETIMES REQUIRE PINK SLIPS, CUT IN ROUTES. AND OTHER THINGS. ARE YOU LOOKING AT ANY ELIMINATION OF JOBS OR CUTTING ANY ROUTES?

SMISEK: WELL LET ME SPEAK TO THAT. WE'RE GOING TO CONTINUE TO SERVE EVERY COMMUNITY THAT WE CURRENTLY SERVE.AND IN TERMS OF FRONTLINE JOBS, WE DON'T EXPECT ANY KIND OF SIGNIFICANT IMPACT ON FRONT-LINE JOBS. AND BECAUSE IT'S GOING TO TAKE AWHILE TO OPERATIONALLY MERGE THESE CARRIERS, PROBABLY THROUGH THE FIRST HALF OF 2012. AND TO THE EXTENT THERE ARE ANY KINDS OF OVERLAPS IN AIRPORTS, FOR EXAMPLE IN SPOKE CITIES, WHICH SHOULD BE QUITE MODEST. TO THE EXTENT WE CAN HANDLE THAT THROUGH ATTRITION AND RETIREMENT, VOLUNTARY PROGRAMS. WE DON'T EXPECT MUCH AT ALL FOR FRONT-LINE EMPLOYEES.

BOND: I'VE BEEN ABLE TO --

LEBEAU: AND THE -- EXCUSE ME. GO AHEAD, SENATOR.

BOND: I HAVE FLOWN CONTINENTAL TO INDIA AND UNITED TO EAST ASIA. I THINK THAT'S A GOOD COMBINATION.

SMISEK: GLAD TO HEAR IT.

BOND: WE'D LOVE TO SEE YOU IN ST. LOUIS. GREAT UNDERSERVED AIRPORT. BUT THE QUESTION I KNOW, JEFF, YOU'RE A LAWYER, WHAT DO YOU EXPECT FROM ANTITRUST? IS THERE, ARE THERE ANY AREAS OF OVERLAP WHERE YOU MIGHT HAVE SOME DOJ REQUIREMENTS THAT YOU DIVEST OPERATIONS?

SMISEK: WE'RE VERY CONFIDENT THAT THIS TRANSACTION WILL PASS ANTITRUST MUSTER. AS GLEN AS I WERE SAYING EARLIER, WE HAVE SUCH EXTRAORDINARILY COMPLEMENTARY ROUTE NETWORKS WITH VERY LITTLE OVERLAP. NO INTERNATIONAL OVERLAP AT ALL AND VERY MODEST DOMESTIC OVERLAP WITH COMPETITION THAT IS UNFORTUNATELY TOO STRONG IN THE OVERLAPS. SO WE DON'T EXPECT MATERIALLY ANY ANTITRUST CONCERNS AT ALL.

TILTON: I THINK THE IMPORTANT THING IS THAT BOTH OF THESE COMPANIES RIGHT-SIZED THEIR NETWORKS IN THE ALLIANCE WE'RE GOING TO PUT THEM TOGETHER JUST AS THEY NOW PERFECTLY FIT.AND WE'RE GOING TO KEEP ALL THAT'S VALUABLE TO US TODAY.

BOND: THANKS, AND GOOD LUCK.

LEBEAU: GLEN TILLTON WHO WILL BE THE NONEXECUTIVE CHAIRMAN OF THE NEW UNITED AIRLINES, AND JEFF SMISEK WILL BE THE CEO OF THE UNITED AIRLINES. A BIG DAY FOR THESE GUYS, CREATING THE WORLD'S LARGEST AIRLINE WITH INCREDIBLE REACH TO DESTINATIONS ALL OVER THE PLACE.

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