Delta, Continental Explore Merger

Delta Air Lines and Continental Airlines are discussing a merger that would create the world’s largest airline, a source close to the negotiations said.

The talks have reached the formal stage, although no deal is imminent, the source told The Associated Press on Tuesday on condition of anonymity.

Continental, the nation’s fifth largest airline, initiated the talks with Delta, the nation’s third-largest carrier. To date, Delta is the only airline with which it has held discussions, the source said. Neither company would comment.

The airline industry was beset with a flurry of mergers nearly a decade ago but has been relatively stable recently.

A year ago, USAir said it was holding talks with American and United Airlines about a possible buyout, but no deal was reached.

This year, many airlines enjoyed record profits, and some industry analysts expressed concern over the prospect of a new wave of mergers.