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United, Delta Deal Still Rumored -- Despite Denials

UAL unit United Airlines and Delta Air Lines continue to deny that they are involved in merger talks -- and as their denials continue, so does the speculation that the opposite is true.

Gordon Bethune, former chief executive of Continental Airlines, is now a consultant to Pardus Capital, a firm with large airline investments.

"It's time to talk," Bethune told CNBC. "Both CEOs have publicly said consolidation is in the best interests of everyone ... If not now, when?"

Sources say a United-Delta merger would involve a 2-for-1 stock swap, and the combined company would retain the United name, CNBC has learned.

"The synergy between these two companies is extraordinary," Bethune said. "Here's a deal where you don't lose jobs, you have job security, you have a better national network to compete, and you actually have some rationalization for traffic."

Delta has to live up to financial claims it made when it fended off a hostile bid from US Airways Group, when Atlanta-based Delta was in bankruptcy earlier this year.

The No. 3 U.S. airline convinced its creditors -- and future shareholders -- that it was worth more than what US Airways was offering. That has not proven to be the case.

"The creditors made a mistake," said Brian Nelson, an analyst with Morningstar. "We were in favor of that merger."

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US Airways' offer, which consisted of $5 billion in cash and 89.5 million US Airways shares, was valued at $9.8 billion at the time Delta's creditors rejected it on Jan. 31.

Delta's stock market value, based on current shares outstanding, is about $5.5 billion. That value, however, rises to $7.9 billion, when accounting for about 120 million shares that have yet to be issued to holders of disputed bankruptcy claims.

-- Reuters contributed to this article.