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United Airlines in Preliminary Talks To Merge With Continental

United Airlines's parent comopany is in preliminary discussions with Continental Airlines regarding a possible merger, according to two newspaper reports.

UAL , the parent of United Airlines, and Continental have been engaged in exploratory talks about a business combination for several months, but the talks have taken on new urgency since US Airways Group made a hostile bid for Delta Air Lines four weeks ago, according to the Wall Street Journal.

United and Continental could not be reached for comment.

Some industry watchers have said they expected the $8.7 billion US Airways' takeover offer for Delta to trigger competing bids as well as other mergers in the industry.

UAL Chief Executive Glenn Tilton and Continental Chief Executive Larry Kellner have met to discuss a possible merger, The New York Times said.

Tilton has been a proponent of mergers in the industry. Earlier Tuesday, he said that the airline industry needs consolidation, but did not disclose United's likely role. Continental has said recently that it too would consider a merger if it is necessary to remain competitive.

In addition, AirTran Holdings said it offered to buy rival Midwest Air Group for $290 million in cash and tock. AirTran would pay $11.25 per share for Midwest.

The offer represents a 37% premium to the 30-day average closing price prior to Oct. 20, the day the bid was made in a letter from AirTran Chairman and Chief Executive Joe Leonard. Oak Creak, Wis.-based Midwest declined the offer at the time.

And Australian carrier Qantasrejected an $8.6 billion buyout bid from a group of private equity firms.

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