Continental (NYSE: CAL) closed at $28.70 Thursday.

CAL and United Airlines (NYSE: UAUA) are in advanced negotiations and could complete a combination quickly if Delta (NYSE: DAL) and Northwest Airlines (NYSE: NWA) strike a deal, says Dow Jones.

WTI Crude oil is recently up .12% to $95.57 according to Bloomberg.

CAL March option implied volatility of 71 is above its 26-week average of 58 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Delta Air Lines (NYSE: DAL) is said to be seriously considering a merger with either Northwest Airlines or United Airline's parent UAL Corp, people close to the matter say, The Wall Street Journal reported Friday.

According to the Journal, Delta is expected to give CEO Richard Anderson permission to pursue formal mergers talks with both Northwest and United, a source with knowledge of the matter said.

Delta shares were down 7 cents to $15.91, while Northwest (NYSE: NWS) declined 22 cents to $15.63, and United (NYSE: UAUA) fell 59 cents to $31.60 amid a broad market sell-off Friday afternoon.

Too many carriers

Many sector analysts believe the U.S. market has too many carriers, and could benefit from two or even three mergers or takeovers. American Airlines (NYSE: AMR) is the largest carrier by traffic, followed by United, Delta, Continental (NYSE: CAL) and Northwest.

How can a company emerge from bankruptcy and then, just about immediately, start looking for acquisition candidates? Isn't that like heading to The Cheesecake Factory, Incorporated (NASDAQ: CAKE) after the gastric bypass?

And yet Delta Air Lines, Inc. (NYSE: DAL) CEO Richard Anderson says the company is on the prowl. According (subscription required) to The Wall Street Journal, "Activist shareholders have been stirring the pot, too. Pardus Capital management, a big holder of UAL and Delta, is agitating for consolidation behind the scenes, a person familiar with the matter says. Meantime, an Icelandic investment fund has started pressing for change at AMR, which prompted the U.S.'s biggest carrier this week to say it is exploring options, including the splitting off of its frequent-flier business."

In most scenarios, it's a lot better to be the shareholder being bought out than a shareholder in the company doing the buying. This would appear to be no exception. With more labor-friendly forces likely to be taking control in Washington, and no end in sight to soaring gasoline prices, the airline industry is likely to face major challenges going forward.

Mergers and acquisition have a way of making problems worse, not better.

Last week we discussed airline seating, and which airlines were trying to stuff two hundred pounds of American into a 100 lb. bag. This week, thanks to U.S. News and World Report, we consider what airports to avoid.

While most of the time travelers buzz from one terminal to another, barely noting the bad food and overpriced golf clothes for sale along the way, every once in a great while a snowstorm or terrorist attack traps thousands of visitors for days at a time. Where would you rather sleep on the floor?

USNWR's Airport Misery Index, developed in cooperation with The Boyd Group, breaks their subject into two classes, large airports and small. The candidates for the most miserable large airports:

1. Detroit, MI -- Detroit Metro Wayne Co (DTW) --Hub --Northwest
2. Chicago, IL -- O'Hare (ORD) --Hub- American (NYSE:AMR), United (NASDAQ: UAUA)
3. Charlotte, NC -- Charlotte Douglas Intl (CLT) -- Hub -- US Airways (NYSE: LCC)
4. New York NY -- Kennedy (JFK) --Hub -- Delta (NYSE: DAL), JetBlue (NASDAQ: JBLU)
5. Newark, NJ -- Liberty Intl (EWR) (The airport People's Airlines made famous has brought ignominity upon the Garden State. Ask most people what they know of NJ, and they'll likely refer to the Newark Airport and Tony Soprano, neither favorably.) -- Hub -- Continental (NYSE: CAL)

The best large airports? Apparently, the west has it all over the east.

1. Oakland, CA -- Metro Oakland Intl (OAK)
   
2. Houston TX -- Wm. P. LHobby (HOU)
   
3. San Jose CA -- Norman Y. Mineta San Jose Intl (SJC)
   
4. Dallas, TX -- Love Field (DAL) -- Hub -- Southwest (NYSE: LUV)
   
5. St. Louis, MO -- Lambert Intl (STL) -- Hub -- American

Next -- the nation's best and worst small airports.

US Airways Group Inc. (NYSE: LCC) is trying to pull out all the stops in its attempted hostile takeover of Delta Air Lines Inc. by lifting its offer by $1 Billion.

In order for the offer to get lifted, US Airways wants the official committee to request Delta to open itself up for due diligence by US Airways, to have a bankruptcy judge to postpone a hearing next week on Delta's restructuring plan and agree to support the start of a formal antitrust review.

The committee of Delta creditors will have until Thursday to decide if it wants to proceed with the US Airways offer. For now, I would be willing to bet that Delta is not going to go for this current offer and instead decide to follow the advice of its chief executive, Gerald Grinstein, who has repeatedly insisted the airline would be better off to emerge from bankruptcy-court protection on its own later this year

The main reason behind the raise in the current offer can be traced to a meeting between US Airways and some Delta creditors who aren't part of the official committee that advised the Airliner to increase its current bid by $2 billion. Will this be enough to sway some votes in US Airways favor? I doubt it, but we should get a better picture of the current takeover situation over the next few days.

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer.

I'm a breastfeeding mama, my little guy is almost 19 months old and not showing any signs of wanting to wean. I nurse him in public whenever it's required (i.e.: whenever he's tired or fussy and a little warm milk will keep the volume down for a bit). Along with lots of other modern moms, I was pretty peeved when I heard the story of Emily Gillette, escorted off a Freedom Airlines flight because she wouldn't put a blanket over her breastfeeding daughter's head. (After a three-hour delay. At 10 p.m. In the window seat. In the second-to-last row. !!)

Freedom Airlines, which operates a Delta Connection line, is now saying they offered to reboard Emily and family after having a ticket agent come to usher them off the plane -- in an email to me, she disputes that claim, and is even more angry that the airline is calling her a liar (she had already claimed that the airline wouldn't let her fly until the next day).

Tomorrow morning at 10 a.m. local time, nurse-ins are planned at Delta ticket counters in many cities. Although the stock has fallen from the high just-post the US Airways bid, it was up 14 cents, or 11%, to $1.40 today. Will these nurse-ins have much effect on a stock already pummeled with the effects of the company's ongoing bankruptcy? I love that public breastfeeding is becoming a headline-y cause. But do protests like nurse-ins effect the companies against which they are targeted?

Even more importantly, should I go to my local nurse-in at the Portland International Airport? Do protests do anything for the world other than employ photographers and the writers of sensational evening news leadins? Are protests a valuable way to express your power over the economy, or just screaming (angrily, and with really cute babies) into the wind?

It's about time the airlines started merging with great zeal. There are too many airlines. Four or five national carriers would be plenty when you consider all the foreign carriers as well. They should do some merging too. The announcement that Delta Airlines Inc. (OTC:DALRQ) and US Airways Group Inc. (NYSE:LCC) may merge is great news to me.

Several years ago I raised this issue with Amey Stone, one of my favorite editors, pen pals and "right coasters." I suggested that the airlines were too slow and decrepit and should start merging.

At the time, we were witnessing banking mergers, insurance company mergers, telecom mergers, automobile company mergers; everywhere you turned there was consolidation in almost every industry. In particular, the aerospace industry had two huge mergers as Boeing Co. (NYSE:BA) acquired McDonnell Douglas and Lockheed acquired Martin-Marietta to create Lockheed Martin Corp. (NYSE:LMT), so the idea was just outside their doorstep!

What in the world were they waiting for?

My breastfeeding email lists are buzzing this morning with news of a sweet-looking New Mexico mother, Emily Gillette. She was flying on Freedom Airlines, a Delta Connection provider, and she was breastfeeding her 22-month-old daughter. Do you know about breastfeeding on airplanes? Many mamas like me swear by it; the sucking action keeps babies' ears from popping and there's nothing better to keep a fussy child from crying.

But the flight attendant on Emily's airplane wasn't so pleased, and asked the mom to cover up, notwithstanding the Public Accommodations Act which protects public breastfeeding in Vermont, where the airplane was parked (most U.S. states have similar statutes). When she wouldn't cover the baby's head with a blanket, as the flight attendant insisted, Emily and her husband and daughter were escorted off the airplane by a Delta ticket agent. While Delta did find an alternate flight for the Gillettes and paid for their hotel that night, it's worth noting that the flight from Burlington to New York had already been delayed three hours -- so in one small act, a family was transformed from slightly frustrated customers to the lead on tomorrow's Good Morning America.

Mamas everywhere are incensed. "I wrote a letter to Delta and canceled my flight!" said one working mom. Another said she was "so mad." The buzz at Blogging Baby is intense with many commenters indicating that they're avoiding Delta or airplanes altogether.

You can argue extended breastfeeding all you like but the ramifications for Delta Air Lines, Inc. (OTC:DALRQ) could be interesting, especially given the unsolicited bid by US Airways Group, Inc. (NYSE:LCC). Could the breastfeeding brouhaha put Delta over the edge?

MOST NOTEWORTHY: Altria Group (MO) and Home Depot (HD) top today's extensive list of upgrades.

• Altria Group (NYSE:MO) was upgraded to Buy from Neutral at Goldman Sachs, in addition to being added to their Americas Conviction Buy List. Goldman upgraded shares of Altria because they expect the Kraft (KFT) spin-off and improving international tobacco trends to drive shares higher.
• Home Depot, Inc. (NYSE:HD) was upgraded to Overweight from Underweight at JP Morgan. Shares of the home improvement retailer were upgraded on the belief that management will be more willing to invest in the business next year.

OTHER UPGRADES:

• Bear Stearns upgraded JetBlue Airways Corp. (NASDAQ:JBLU) and AirTrans Holdings, Inc. (NYSE:AAI) to Outperform from Peer Perform. The firm upgraded both airlines citing the potential Delta Airlines, Inc. (Other OTC:DALRQ) and US Airways Group, Inc. (NYSE:LCC) merger and the implications for likely capacity reductions and an improved RASM outlook. JetBlue was also added to Bear Stearns Focus List on today's news.
• Roth Capital upgraded IMAX Corp (NASDAQ:IMAX) to Hold from Sell as they believe business has bottomed and a fair valuation.
• Deutsche Bank upgraded Vodafone Group (NYSE:VOD) to Buy from Hold. The firm said Vodafone has upside to consensus estimates due to additional cost reductions and in-market consolidation in Europe.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).