American Airlines has had early stage merger talks with US Airways and is in advanced  talks for an alliance with Continental Airlines .
News of the talks comes in the wake of the talks of Delta Airlines and Northwest Airlines merger  announced two weeks ago to become the worldâℬ™s largest airline .

American Airlines and Continental  are focusing  on forming an  alliance that could share passengers ,much like the Sky Team partnership that includes Air France-KLM , Alitalia , Czech Airlines , Delta Airlines and Northwest Airlines  .

Alliances have proved beneficial in the aviation industry  as profits are generated through marketing programmes and flight  code- sharing without the headaches of combining operations .
                              
 Meanwhile , Continental is also in advanced talks with United Airlines  for a  complete merger . It is to be seen whether Continental will choose the merger or the alliance . United Airlines ,on the other hand , is   also in serious merger talks with US Airways ,and will choose to merge with either Continental or US Airways soon .

Source : Gulf News