Continental in Merger Discussions With Delta

Delta Air Lines and Continental Airlines are discussing a possible merger that would, if carried out, combine the nation’s third- and fifth-largest airlines, a knowledgeable source said Tuesday.

The talks have reached the formal stage, although no deal is imminent, said the source close to the negotiations who spoke only on condition of anonymity.

Continental, the nation’s No. 5 airline, initiated the talks, and is only holding discussions with Delta, the nation’s No. 3 airline, the source said.

The discussions were first reported in Wednesday’s editions of the New York Times.

Ned Walker, a spokesman for Houston-based Continental, said, “We don’t comment on industry speculation.”

In Atlanta, Delta spokesman Todd Clay said he also would not comment. “We have a long-standing policy of not commenting on rumors of acquisitions” or mergers, he said.

A merger would allow Delta, which has trimmed flights in the Dallas-Fort Worth area, to maintain its dominance in the South.

Delta has more routes to Europe than Continental, which is stronger in South and Central America.