Continental, Delta in Merger Talks Amid Deals by Carriers

Continental and Delta airlines are involved in preliminary discussions about a possible merger in which Continental would acquire the much larger Delta, industry sources said Friday.

The talks, a response to continuing consolidation in the airline industry, “are very informal, and they’re still in the very early stage,” a source said.

Sources familiar with the situation said both sides are exploring their next move, should the federal government approve American Airlines’ acquisition of bankrupt Trans World Airlines and the proposed merger of United Airlines and US Airways, two events that would overnight leave American and United with 50% of the nation’s air passenger market.

The Continental-Delta talks have focused on the smaller company possibly acquiring the larger one because of a complicating role played by Northwest Airlines. Northwest has veto power over any takeover of Continental by a third airline. The veto control is the last vestige of Northwest’s former controlling ownership of Continental.