Delta could be looking for a deal

— -- Executives at Delta Air Lines today will seek board approval to launch separate detailed merger talks with United Airlines and Northwest Airlines.

Sources with knowledge of the proposal to the board confirmed that CEO Richard Anderson is seeking authority to start talks with the airlines because their route networks complement Delta's. The sources asked not to be identified because they're not authorized to speak publicly.

Delta, Northwest and United declined to comment specifically on the board proposal or prospects for a merger. But Delta spokeswoman Betsy Talton said Delta's board months ago established a special committee and hired advisers to explore strategic options, including a merger. United spokeswoman Jean Medina said her airline's position on "the need for consolidation" is well known.

Despite huge increases in fuel costs and intensifying competition from discounters, large U.S. airlines, since 9/11, have decided to combine operations only once: the America West-US Airways deal in 2005.

And prospects for a Delta merger now are far from certain. Calyon Securities' Ray Neidl noted that even if Delta's board gives its approval, "It's just permission to start formal talks. Nothing may come of it, and they still would have to get regulatory blessing."

Airline mergers are unusually difficult because of federal scrutiny, labor union resistance and the industry's volatility. Delta emerged from Chapter 11 bankruptcy reorganization last year after rebuffing a $10 billion hostile takeover attempt by US Airways.

Former Delta CEO Gerald Grinstein, who opposed the merger, rallied employees with a "Keep Delta My Delta" campaign, and persuaded Delta's bankruptcy creditors to reject the deal.

Fuel is an airline's largest single expense, and the price of crude oil this month hit a record of $100 a barrel. Share prices of major U.S. airlines hit 52-week lows earlier this week. Consolidation could let airlines eliminate redundant airport hubs and routes, raise fares and generally compete better.