Credit Suisse upgraded Delta Air Lines Inc and Northwest Airlines Corp to outperform from neutral, and said the merger between the companies is near certainty.

Pilots from both airlines have reportedly come to an agreement over how to integrate their seniority lists which means the merge between the two airlines can finally move forward, according to various media reports.

Talks between the airlines are ongoing since January as pilots failed to compromise on seniority, which ultimately determines the size of a pilot's paycheck. Delta has said it wouldn't agree to a merger until its workforce had fully agreed with the terms.

Credit Suisse analyst Daniel McKenzie said there is a 98 percent probability for a deal.

Given the risk to standalone plans in the current volatile macro environment, believe a NW/DL deal has become a strategic imperative for both carriers, with or without labor, he wrote in a note to clients.

Analysts have said that with soaring fuel prices, airlines like Northwest and Delta will have to find ways to park older and more expensive aircraft as well as shut down poor-performing hub connections.

If crude oil hits $120 a barrel, McKenzie said it will be like a Category 5 hurricane sweeping through standalone business plans. Crude oil set a new record of $112.21 a barrel earlier this week, up from $70 a barrel last summer.

Steve Hart, a Washington lobbyist , said any merger need be announced by May 30 or there's no way to get a deal through in time for the U.S. Department to review it before President George Bush ends his term office.

Analyst say a change in administration will delay any decision on the merger.

American Airlines parent AMR Corp. may also be looking to combine, McKenzie said, and Alaska Air Group Inc. is an opportunity of last resort for American.