A merger merry go-round, as American Airlines starts talks with US Airways, Continental

New York: Two weeks after Delta Airlines and Northwest Airlines announced their intention to merge and become the world's largest airline, industry sources indicate that American Airlines may have held early-stage merger talks with US Airways and may be in advanced talks with Continental Airlines for an alliance.

Reports suggest that discussions with Continental are focused on forming an alliance that could share passengers, much like the SkyTeam partnership that includes Air France-KLM, Alitalia, Czech Airlines, Delta Air Lines and Northwest Airlines.

US airlines are now in the grip of merger moves as they seek to decrease the impact of  rising fuel prices, a weak economy and growing competitive threats from European and Asian carriers.

Complicating the picture somewhat is the fact that Continental is also in talks with United Airlines for a full merger, according to industry sources. United Airlines, in turn, is in serious talks with US Airways for a merger.

American Airlines, currently, is the largest US carrier.

A combined United and Continental match up would surpass the Delta-Northwest combination.

There is a certain urgency to the merger moves adopted by US carriers as the administration of US president, George W Bush, is considered to be more merger-friendly, but is also nearing the end of its tenure in January 2009.

The merger moves received a fillip after the US Justice Department said it had no problems in considering multiple merger proposals in the airline industry and completing all reviews before the Bush administration leaves office.