"Any type of business combination is historically fraught with difficulties including regulatory problems, huge expenses, corporate governance issues and, most notably, employee relations," said Greg Davidowitch, president of the United branch of the Association of Flight Attendants.

Also, Northwest could block any acquisition of Continental by virtue of the "golden share" it holds in its Houston-based business partner. A 2000 deal between the airlines gave Northwest that power in exchange for letting Continental buy back some of its stock that its code-share ally held.

Nevertheless, United reportedly has for months been studying ways to merge with either Continental or Delta, and the combination of private-equity funding and the willingness of both sides could get a deal done.

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Contributing: Brad Foss

On the Net: www.united.com; www.continental.com