Reports: Delta, Northwest merger close

Delta Air Lines Inc. and Northwest Airlines are close to announcing a merger that would create the world's largest airline, several national media sources reported late Sunday.

The reports all cited anonymous sources close to the situation. The sources also noted issues remain with pilot negotiations. But an official announcement apparently awaits the approval of the boards of both airlines and could come as soon as Tuesday.

The Wall Street Journal reported in its Monday online edition that Delta (NYSE: DAL) was still trying to reach an agreement with its pilots on a new contract that would allow the airline more flexibility in a merger.

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Meanwhile, pilots at Northwest (NYSE: NWA) met near the airline's Minneapolis-area headquarters and issued a statement that they expect any merger "must clearly be in the interests of NWA pilots, customers and employees," the Journal said.

The Wall Street Journal also placed Northwest's value at about $3 billion, down from $4.6 billion 10 weeks ago, due to the deteriorating market, driven by high fuel costs, that have caused several smaller airlines, including Columbus, Ohio-based Skybus, to shut down in recent weeks.