ATLANTA Delta's board will be asked Friday to allow formal merger talks between Delta and Northwest and United, with the idea that Delta would ultimately choose to combine with one of the two, people familiar with the situation told The Associated Press on Thursday on condition of anonymity because of the sensitivity of the talks.
Delta spokeswoman Betsy Talton declined to comment. Reached on their cell phones, two of Delta's directors, John Brinzo and Paula Rosput Reynolds, also declined to comment.
Shares of Delta Air Lines Inc. soared more than 18 percent Thursday following the renewed speculation that the nation's No. 3 carrier may be close to inking a deal to combine with another airline.
Delta shares rose $2.46 to close at $15.98. The surge followed a nearly 15 percent rise in Delta's stock on Wednesday.
On Wednesday, the head of the Atlanta-based company's pilots union said in a letter to rank-and-file members that a combination involving Delta may be close.
Lee Moak, chairman of the union's executive committee, said in the letter that "consolidation may indeed be at our door."
He added later in the letter, "While the bankruptcy threat is now behind us, the potential for a consolidating event is every bit as real."
In November, Delta, which has a hub in Salt Lake City, denied reports that it was talking to UAL Corp.'s United Airlines about a combination. Since then, it has said little about the issue. Some analysts have suggested recently that a Delta-Northwest combination may be possible.
Delta has said previously that its board is evaluating whether to enter into a deal to combine with another airline.
United spokeswoman Jean Medina declined to comment Thursday on the latest developments, but repeated past statements by United that it is interested in consolidation.
Earlier Thursday, JP Morgan airline analyst Jamie Baker said in a research note that while the shares of major airlines have seen big drops in recent months, over the next few months he expects there could be big gains in the sector.
Moak said in his letter Wednesday that union leaders met in Atlanta this week in part to discuss "the fact that our company may soon be involved in some form of industry consolidation." Union meetings continued Thursday afternoon.
Moak noted in the letter that fuel prices are at record highs, and Delta's stock price since the company emerged from Chapter 11 last April has fallen dramatically, at one point as much as 45 percent.
Moak did not say in the letter how the union is aware Delta may be close to a merger. The pilots union has a representative on Delta's board of directors.
Moak did not provide any specifics on a possible merger involving Delta, but he said the union has retained legal counsel specializing in the field of mergers and acquisitions, and he has reactivated the union's strike preparedness committee.
Moak reiterated that the pilots union would support a merger involving Delta under the right circumstances.