Official says United, Delta have discussed merging; airlines deny it

ATLANTA — UAL Corp.'s United Airlines and Delta Air Lines Inc. have been discussing a combination between the nation's second- and third-largest carriers that would keep the United name and the corporate headquarters in Chicago, The Associated Press has learned.

But Delta issued a statement denying "published reports that it had engaged in merger talk with United." The statement added, "There have been no talks with United regarding any type of consolidation transaction and there are no such ongoing discussions."

United called the report of recent talks "wholly inaccurate."

However, on Oct. 12, 2006, then- Delta CEO Gerald Grinstein said during a stop in New York that he had previously received "feelers" from United about a possible merger.

Earlier Wednesday, Delta said in a statement that its board has established a special committee to work with management to review and analyze strategic options for the airline. Top executives have said recently they are trying to determine whether consolidation makes sense for Delta.

There is a sense of urgency in the most recent talks, which have been going on for some time and continued as recently as a week or so ago, an official with knowledge of the talks said Wednesday. The official spoke on condition of anonymity because the person was not authorized to speak publicly. The official stood by the assertions about the talks after learning of the statements by Delta and United.

"They want to get something done before a new administration gets in and so they get the clock ticking on" federal regulatory approval, the official said.

The exact financial details of the transaction being discussed are not clear. But the talks involve United being the name of the combined airlines, the headquarters staying in Chicago and Delta's Atlanta hub being an operational center for the two carriers, the official said. One possible scenario involves Delta CEO Richard Anderson being the chief of the combined airline, the official said.

Delta also has had talks with other airlines, the official said, without specifying which airline or the status of any such talks.

Shares of Delta rose 77 cents, or 4.1 percent, to $19.52 in trading Wednesday while UAL shares gained 67 cents, or 1.5 percent, to $44.17.

When Anderson was named in August as Delta CEO to replace Grinstein, there was immediate speculation in the investment community that Delta and Northwest might eventually merge. Anderson is a former CEO of Northwest Airlines Corp.

Anderson immediately tried to dispel such speculation, telling Delta employees he wasn't coming to Delta to facilitate a deal with Eagan, Minn.-based Northwest.