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United, US Air Near Merger, Source Says

United Airlines and US Airways are in very advanced talks with the expectation of announcing within two weeks that they are combining, a person close to the negotiations told The Associated Press on Monday.

The two carriers stepped up their talks after Continental Airlines Inc. caught United off guard by deciding not to pursue a deal with the UAL Corp.-owned carrier.

The source asked not to be named because of the sensitive nature of the talks. The timing of any agreement remains hard to predict, and either side also could pursue an alliance instead or simply walk away from a deal, as Continental did.

Representatives of both airlines said they do not comment on rumors or speculation about consolidation.

Chicago-based United and Tempe, Ariz.-based US Airways Group Inc. have been in preliminary talks for weeks about possibly teaming up, although United had focused more recently on joining with Continental. As the second and fifth-largest U.S. airlines, both are under more competitive pressure to consolidate in the wake of the proposed creation of the Delta-Northwest mega-carrier. Delta Air Lines Inc. has agreed to buy Northwest Airlines Corp.

Combined, United and US Airways have about 91,000 employees and annual revenues of $31.8 billion.

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