JPMorgan Chase & Co , led by James Jimmy Lee, and Goldman Sachs are advising United Airlines on its merger talks with US Airways , several people familiar with the matter said.

Citigroup Inc is advising US Airways in the discussions, which began more than a month ago and could create the second-largest airline in the United States, the sources said.

A deal, aimed at cutting costs and competing with a combined Delta-Northwest , could be consummated in a few weeks, the sources said.

Much of the groundwork was laid in 2008, when the two carriers spoke about merging. But issues such as deal structure and management have not been addressed yet, and will be discussed in the coming weeks, the sources said.

All three banks declined to comment.

The two airlines have been in informal talks for months now, but the discussions have taken on a serious tone in the past few weeks, the sources said.

Lee, a vice chairman at JPMorgan, is not an airline banker. But he has been credited with brokering some of the most high-profile deals in the past decade, including the $17.3 billion buyout of Harrah's and the $30 billion merger of Comcast Corp and General Electric's NBC, which is awaiting approval by the Department of Justice.

He is also credited for inventing the syndicated loan market and has bailed out some of the biggest names in U.S. corporate history in the past years.


This would not be the first time the two airlines have tried to merge: in 2000, they announced a $4.3 billion deal that fell apart because of opposition from labor unions and the Department of Justice.

In 2008, sources had told Reuters that US Airways was in parallel talks with United and Continental Airlines about a possible merger, when Delta Air Lines was merging with Northwest to create the world's largest airline.

Those talks ended as United chose to pursue an alliance with Continental.

Some analysts have said United's talks with US Airways might be intended to signal to Continental that it is ready to renew merger talks, but sources said on Thursday that Continental had not approached United yet.

Analysts remain skeptical about a deal between United and US Airways. It would lack support from United's pilots union, a major force that has derailed mergers in the past.

Antitrust issues will also likely come up again: regulators could again conclude that a merger would give the new company too large a share of some U.S. markets, including Washington, D.C.

(Reporting by Jui Chakravorty; Editing by Tim Dobbyn and Steve Orlofsky)