Delta Air Lines and Northwest Airlines are in talks on a possible link-up, according to a newspaper report on Wednesday.

The Wall Street Journal, which cited sources "familiar with the matter", said representatives of the two carriers, which are numbers 3 and 5 in the United States respectively, have met regularly for weeks discussing a possible link-up after they both emerge from bankruptcy.

The two airlines have been restructuring in bankruptcy since September 2005 and aim to exit this year. A Northwest spokesman declined to comment. Delta officials were not immediately available for comment.

The report came in the wake of news that US Airways, which made a hostile bid for Delta in November, has raised its offer to USD$10.3 billion.

Delta management had rejected the original US Airways bid, but US Airways hopes to persuade the carrier's creditors to have management reconsider.

Delta has filed a plan to exit bankruptcy as a stand-alone company. Northwest has said it plans to file its own reorganization plan by January 16.