Continental and United are discussing a possible merger

Continental Airlines (Houston) has restarted merger talks with United Airlines (Chicago), two years after walking away from almost sealing a deal, a source briefed (probably from United) on the matter said yesterday according to this Reuters report.

Reuters reports the talks are in very early stages, though much of the groundwork was laid in 2008, the source said. United and Continental came very close to merging at the time, but the talks fell apart as Continental chose to pursue an alliance instead. Both Continental and United are in the Star Alliance.

The talks come as United is in similar discussions with US Airways (Phoenix), but those talks are much farther along, the source said. US Airways and United are in talks that could create the second-largest U.S. carrier. Those discussions, aimed at cutting costs and competing with the now combined Delta Air Lines (Atlanta) and Northwest Airlines, have been going on for months, the sources said.

How much of these media “leaks” are being stirred up by United which has been itching for a merger for a long time?

Read the full report from Reuters:

Copyright Photo: Ton Jochems. Continental’s first aircraft to wear the Star Alliance livery is this Boeing 757-224 registered N14120 (msn 27562) pictured at Amsterdam.