UAL Corp.'s United Airlines and Continental Airlines Inc., the carriers that broke off merger talks last month, are in discussions to form an alliance able to set pricing and schedules, people familiar with the matter said.
The effort is separate from United's negotiations with US Airways Group Inc. on a possible merger, said the people, who asked not to be named because the talks are private. United will pick one of those choices or stay independent, the people said.
An alliance with antitrust immunity to collaborate on fares would provide most of the benefits of a merger while skirting regulatory challenges as well as the need to mesh workforces. Continental has been evaluating its options since Delta Air Lines Inc. and Northwest Airlines Corp., its U.S.-based partners in the SkyTeam alliance, agreed April 14 to combine.