Reports: UAL, Continental Talk Merger

The two airlines could announce a deal by the end of next week, <I>The New York Times</I> reports.
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United parent UAL (UAUA) is nearing a merger deal with another major airline, and the likely partner appears to be Continental Airlines (CAL) - Get Report, according to published media reports.

United is "getting closer" to a merger agreement with Continental, according to a report in

The New York Times

Saturday that cited people with direct knowledge of the talks. The two airlines are in advanced talks and would like to wrap up a deal by Thursday, the report said.

Meanwhile,

The Wall Street Journal

reported on its Web site Saturday that United was "nearing a decision" about a potential merger partner. The

Journal

reported that although United has had detailed discussions with

US Airways

(LLC)

for more than a month, it recently began parallel discussions with Continental.

Consolidation is in the air for the industry, which is smarting from high fuel costs. On April 14, Delta Air Lines and Northwest Airlines announced a deal that would catapult them past No. 1 American Airlines, a unit of

AMR

(AMR)

, and No. 2 United to become the biggest U.S. carrier. Not wanting to be marginalized in a tough environment, other airlines are seeking partners. If United were to merge with No. 4 Continental, the resulting company would be even bigger than the proposed Delta-Northwest combination.

According to the

Journal

, United wants to make a decision about a merger partner and specific deal in the next couple of weeks. That would mean its merger gets reviewed by regulators on the same timetable as the Delta-Northwest deal -- and before January, when a new president is inaugurated, the

Journal

said. A new administration could take a tougher stance toward airline mergers.

Continental and United spokespeople declined to comment about whether they were holding merger talks, according to the

Times

UAL shares ended Friday down 19 cents at $15.21. Continental stock finished the session down 46 cents at $17.22, and US Airways shares gained 10 cents to end at $7.16.

This article was written by a staff member of TheStreet.com.