Delta Air Lines Inc., in talks to combine with Northwest Airlines Corp., said it hasn't reached a satisfactory agreement, while bargaining between the carriers' pilots unions has stalled over seniority.

Any deal must preserve worker seniority as well as Delta's name and Atlanta headquarters, Chief Executive Officer Richard Anderson said in a memo to employees Tuesday. Negotiations aimed at ranking the carriers' 12,000 pilots by experience broke off late last week, and new talks haven't been scheduled, four people familiar with the matter said.

A combination of Delta, the third-largest U.S. airline, and No. 5 Northwest would surpass AMR Corp.'s American Airlines as the world's biggest carrier. Stock in Delta, which has a hub in Salt Lake City, and Northwest have dropped more than 16 percent since Feb. 11 on concern that the merger is in jeopardy.

"The market is clearly interpreting the delay as casting doubt about whether the deal will get done," Jim Corridore, a Standard & Poor's analyst in New York, said in an interview.

Delta and Northwest pilots remain divided on seniority, which sets compensation, work schedules, aircraft and routes. They have already agreed on a $2 billion package that would include higher pay, an equity stake in the combined airline and a board seat, people familiar with the talks have said.

"This is a game of high-stakes chicken," FTN Midwest Research Securities Corp. analyst Michael Derchin in New York wrote Wednesday in a note to investors. He recommends buying Delta and Northwest. "If logic prevails, there will be a compromise on seniority."

The risk of losing the increased pay package may prod pilot bargainers to reach a compromise, Morgan Stanley analyst William Greene said in a note. Oil at more than $100 a barrel heightens pressure on airlines to lower costs by combining, he said.

"The very substantial pay increases and equity ownership that labor stands to receive should a deal happen will increasingly put pressure on labor leaders to find common ground on seniority issues," Greene wrote Tuesday. "We still believe a deal is possible near-term."

Northwest union negotiators want their more-senior pilots to be ranked by hire date, while Delta wants size of planes and routes currently flown to be considered, people close to the talks said last week.

Anderson and Chief Financial Officer Ed Bastian said in the memo that any deal must strengthen Delta's network and help accelerate international expansion plans in addition to creating job security.

"To date, we have not arrived at a potential transaction that meets all of our principles," Anderson and Bastian wrote. "We have a strong stand-alone plan. We will maintain our attention on executing that plan while we continue to look at strategic alternatives."

Delta's 7,000 pilots and Northwest's 5,000 all belong to the Air Line Pilots Association. It is the only major unionized group at Delta.

Matt Coons, a spokesman for the Northwest branch of the Air Line Pilots Association, didn't return calls seeking comment. Kelly Regus, a spokeswoman for Delta pilots, declined to comment, as did spokeswomen for both airlines.

Northwest CEO Doug Steenland said in an employee memo Tuesday that consolidation is "inevitable" and that the carrier's board is "prepared to consider positively" a transaction that would create better job opportunities and a stronger airline.

Northwest's pilot leaders ended a special two-day meeting on Feb. 22 without voting on a report on "cooperative merger exploration," according to an update on the union's Web site.

Airlines previously have tried to get a pilot accord only after announcing a merger. Opposition among pilots cost American Airlines $225 million in 1999 after they protested integration with Reno Air, and pilots at US Airways Group Inc. and the former America West Airlines still haven't agreed to a contract more than two years after the carriers merged.

"Management's desire to get labor in line is pretty much divergent from the way these mergers have been done in the past," said Corridore, who has "hold" ratings on both Northwest and Delta. "This is a complex and tricky negotiation that should not be expected to go rapidly."