Continental Airlines Inc. directors met Wednesday to discuss a potential combination with United Airlines, according to people familiar with the situation.
Executives for the two companies have been meeting for more than a week about a deal, which would create the world's largest airline by passenger traffic.
Published reports earlier this week suggested the talks had snagged over price — the value to place on each company's shares in a stock-swap deal. The decision by Continental management to brief its board appeared to indicate that the discussions are not dead.
United and Continental declined to comment. The Continental board meeting was described by two people familiar with the situation but who spoke on condition of anonymity because they were not authorized to comment publicly.
One of the people said the airlines could have a deal to announce by the first part of next week.
Analysts say that United's hubs in Chicago and San Francisco would complement Continental's in the New York City area and Houston. Internationally, United has strong routes in Asia, while Continental has a deep network in Latin America and Europe.
United, with headquarters in Chicago, is the nation's third-largest airline behind world No. 1 Delta Air Lines Inc. and AMR Corp.'s American Airlines. Continental, based in Houston, is the fourth-largest.
Advocates of consolidation, such as United CEO Glenn Tilton, believe larger U.S. airlines would be more efficient, more competitive with foreign giants, and would help reduce capacity in the industry, which in theory would help the airlines earn money by raising prices.
The two companies got to this point in 2008 before Continental walked away from the talks. At the time, Continental executives were concerned about the risks of making a deal when the airline industry was suffering huge losses and facing record-high fuel prices.
On Tuesday, United parent UAL Corp. reported a smaller-than-expected loss for the first quarter, as passengers paid much more for each mile they flew than they had a year before. Continental also lost money in the first quarter, but analysts forecast that each company will turn profitable for the full year 2010.
United also discussed a combination with US Airways Group Inc., but US Airways announced last week it had pulled out of discussions.
UAL shares rose $1.24, or 6.1 percent, to close Wednesday at $21.75; Continental shares gained 55 cents, or 2.5 percent, to $22.17 on Wednesday.
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