DALLAS United Airlines and Continental are in advanced negotiations and could complete a combination quickly if Delta and Northwest strike a deal, according to a person familiar with the negotiations.
However, there are still significant issues yet to resolve, according to the person, who was not authorized by the companies to talk about the deal.
United spokeswoman Jean Medina and Continental Airlines Inc. spokesman Dave Messing declined to comment.
Delta Air Lines Inc. and Northwest Airlines Corp. have been intently discussing a deal for several weeks, according to people familiar with the situation. But issues such as combining work forces remain obstacles.
The prospects for an imminent deal seemed to improve Thursday when Air France-KLM, the world's largest airline by revenue, said it was considering investing in a Delta-Northwest combination.
Such a deal is expected to trigger more consolidation in the highly competitive airline industry, as rivals try to match or eclipse Delta-Northwest, which would become the world's largest airline.
United, owned by UAL Corp., and Continental must wait for the Delta-Northwest talks to run their course because Northwest can block any deal involving Continental. That veto power is the vestige of Northwest's one-time stake in Continental.
The Chicago Tribune reported that United hasn't ruled out bidding for Delta if Delta can't close the deal with Northwest. That would give Chicago-based United the ability to play Northwest and Houston-based Continental off each other in a search for the best possible deal.
The Tribune reported that Continental Chief Executive Lawrence Kellner would run the combined company and that its headquarters location would be settled later.
Analysts say United's strength across the Pacific would complement Continental's routes to Europe and Latin American and its hub in the New York area, where United is weak.
United, the second-largest U.S. airline behind American, and No. 4 Continental have previously talked about combining but failed to strike an agreement.
Leaders of the pilot groups at United and Continental have begun discussing combination-related issues, but management hasn't indicated that a deal is imminent, said Mark Adams, a spokesman for Continental pilots. He said there have been no formal talks on issues such as combining the two airlines' seniority lists, a huge issue that affects pilots' pay and working hours.