Delta Air Lines and Northwest Airlines shares fell on Monday partly on concerns their merger talks may fail on the inability of pilots to agree on how to combine their ranks.
Separately, the union representing baggage handlers and customer service workers at Northwest spoke out forcefully against any deal, saying the combination was bad for workers and service.
Although shares of other big airlines were up, Delta and Northwest were hit by twin concerns associated with uncertain consolidation prospects and the steady increase in fuel prices.
Crude oil prices on the New York Mercantile Exchange rose for the seventh time in the last eight sessions on Monday, rising above USD$99 a barrel.
"People are getting a little nervous about a potential merger," said Ray Neidl, an analyst with Calyon Securities. "The longer this thing drags out the less likely it's going to happen this year."
Delta lost 22 cents, or 1.3 percent, to close at USD$16.15, while Northwest shed 41 cents, or 2.5 percent to USD$15.86. In after hours trading, Delta slipped another 7 cents while Northwest dropped another 4 cents.
Delta and Northwest have been discussing a deal that would create the world's largest airline.
Speculation intensified last week that a merger was near, but cooled by the weekend with no agreement from pilots on combining their seniority lists and no announcement from the airlines that they would move forward.
The talks cover more than 11,000 pilots at Northwest and Delta.
While their approval is not obligatory, pilots are a powerful group at airlines and executives at Delta and Northwest want to have them on board before proposing their deal to their boards, shareholders, and the government.
"Whoever thought that airline pilots would agree on something as important as seniority integration in a short period of time was quite mistaken," said David Stempler, president of the Air Travelers Association.
Seniority lists are key for pilots because they are crucial for determining wages, hours worked, routes flown and vacations.
Delta, which would be the acquiring company in any merger with Northwest, had no comment on the lack of a seniority deal with pilots.
In a separate development, the International Association of Machinists said it would oppose big airline mergers, including Northwest and Delta.
The group, which represents 12,500 bag handlers, customer service representatives and reservation agents at Northwest, said a merger would result in substantial job losses and service cuts.
Delta and Northwest have said they want to grow the airline, not cut jobs.