Updated from 7:34 a.m. EDT

Investors are playing the airline takeover game again, this time with

Trans World Airlines

(TWA)

.

Shares in TWA closed up 5/16, or 12%, to 2 7/8 following a

Wall Street Journal

report Friday that it was in talks to either merge or be bought out by

AirTran Holdings

(AAIR)

- the Orlando, Fla-based cheap-fare airline formerly known as Valujet.

Talks began a month ago, sources told the

Journal

, and former due dilligence began recently. The talks center around either a full merger or an AirTran buyout of St. Louis-based TWA, but both airlines, at least initially, would be operated independently.

In reaction to the report, Julia Bishop-Cross, spokeswoman for TWA, said, "There are lots of rumors flying around. TWA is aware of what is happening in the industry. All airlines participate in talks with other airlines about various business transactions from time to time."

The report cautioned that a deal is not imminent and would face numerous hurdles. The article pointed out that any TWA-AirTran hook-up would not be in response to the merger frenzy that has gripped the airline industry lately, but a response to the shaky financial ground on which each of the two airlines stand.

In recent weeks,

UAL

, the parent of United Airlines, announced it planned to

buy

US Airways

, and

AMR's American Airlines

has made

overtures to

Delta Airlines

and

Northwest Airlines

.

AirTran finished up 1/4, or 6%, to 4 9/16