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Continental, UAL meeting on potential deal: sources

PHOENIX (Reuters) - The boards of Continental Airlines Inc CAL.N and UAL Corp's UAUA.O United Airlines are meeting this week to consider a potential merger and news of a deal could come as early as Friday, sources told Reuters.

A merger of the two U.S. carriers would create the world's largest airline, surpassing Delta Air Lines Inc DAL.N in traffic and revenue.

Continental’s board met on Wednesday, one source said. Continental and United declined to comment.

The two U.S. airlines resumed merger negotiations earlier this month, two years after walking away from similar talks.

Earlier this week, a source told Reuters the two companies disagreed over the exact ratio of shares that United planned to pay for Continental in the potential stock-for-stock merger.

Continental wanted to use the so-called “unaffected share prices,” which is the price of the stock before the recent spate of news of airline merger talks, while United wanted to use a later market price, the source said.

UAL's share price has risen to $21.75 on Wednesday from $18.95 on April 7, when news of talks between United and US Airways LCC.N first broke. Those talks have ended. Over that same period, Continental shares rose to $22.17 from $20.50.

Other aspects of the potential deal have already been agreed to, including naming United Chief Executive Glenn Tilton as chairman and Continental CEO Jeff Smisek as chief executive, sources previously said. United would be the surviving brand and the combined company would be based in Chicago, they added.

Reporting by Kyle Peterson in Phoenix; Jui Chakravorty and Deepa Seetharaman in New York; and John Crawley in Washington, D.C.

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