NEW YORK -- Delta Air Lines (DAL.N: Quote, Profile, Research) and Northwest Airlines (NWA.N: Quote, Profile, Research) have revived merger talks, according to a report in The Financial Times.

Citing people familiar with the matter, the newspaper said Delta's board members, who convened a meeting late last week to discuss the company's options, agreed to press ahead with negotiations with Northwest.

Those talks are now intensifying, with the two sides set to meet again this week, the newspaper said.

Last month, Northwest had proposed to Delta that they go ahead with a merger, despite a lack of support from pilots for the deal.

Speculation that the carriers would try to create the world's biggest airline fizzled out in March when their respective units of the Air Line Pilots Association (ALPA) failed to negotiate a formula for working together.

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Big increases in jet fuel prices and a steadily weakening U.S. economy have stalled the airline industry's modest recovery from the 2001-2006 downturn.

Skybus Airlines Inc, a low-cost U.S. carrier, on Saturday became the third U.S. airline to shut down its operations in the space of a week, following similar moves by ATA Airlines Inc and Hawaii-based Aloha Airlines.

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