United Airlines parent UAL won unconditional EU regulatory approval on Tuesday for its USD$3.17 billion purchase of Continental Airlines.

UAL, which unveiled the deal in May, had said the combined company would fly to 370 destinations and have 10 hubs worldwide, helping it attract more business travellers.

The global downturn has hit the airline industry already under pressure from volatile fuel prices, low-cost competition and overcapacity.

The European Commission, the European Union's competition watchdog, said in a statement that the deal would only result in an incremental increase in market shares for the carriers.

"The Commission's investigation confirmed the complementary nature of United's and Continental's respective networks as regards transatlantic EEA-US routes and the fact that their combination will not give rise to concerns on any specific route," the EU executive said.

US regulators are mow reviewing the deal. Some US senators have criticised the transaction, saying it would hurt consumers and reduce competition. Congress cannot block the transaction but can influence regulators and public opinion.

The airlines, which expect to close the deal before the end of 2010, expect to generate between USD$1 billion to USD$1.2 billion in annual sales and cost benefits by 2013.