Delta steps up merger review, denies UAL talks

By Chris Reiter

NEW YORK (Reuters) - Delta Air Lines Inc (DAL.N: Quote, Profile, Research, Stock Buzz) said on Wednesday it set up a special board committee and hired financial and legal advisers to help it review its merger options.

But the No. 3 U.S. carrier denied it is discussing a possible deal with UAL Corp (UAUA.O: Quote, Profile, Research, Stock Buzz), parent of United Airlines, after news reports the two airlines were in deal talks.

A source familiar with the situation told Reuters all the major airlines have been in talks with one another at some stage and a UAL-Delta deal has been viewed as the most likely one to get done.

UAL discredited the reports.

"We do not respond to wholly inaccurate statements made by people who claim to have knowledge when they clearly do not," said UAL spokeswoman Jean Medina.

Both companies have market values of about $5 billion. A deal would be the largest airline merger on record and create the world's biggest airline based on passenger traffic.

Delta's move to create a special committee and hire advisors appear to move the industry a step closer toward a long-anticipated wave of mergers.

"This is the real thing," said DePaul University transportation expert Joe Schwieterman. "They appear ready to move to the next step."