United Airlines and Continental Airlines disagree over the price of a potential stock-for-stock merger, according to source familiar with the situation.
Last week, sources said that the airlines were considering a stock-for-stock merger with no premium, creating a company valued at roughly USD$6.6 billion.
The companies resumed merger negotiations earlier this month, two years after walking away from similar talks.
The companies, however, have disagreed on the exact ratio of shares that United planned to pay for Continental, said the source, who declined to be named because they were not authorised to speak to the media.
The ratio affects the price United would ultimately pay for the deal.
Negotiations are ongoing, the source said. The New York Times reported that the disagreement over the price, however, could be a deal-breaker.
Continental wants to use the so-called "unaffected share prices" — which is the price of the stock before news emerged of recent spate of airline merger talks, the source said.
United, however, wants to use a later market price, the source said.
Under Continental's scenario, Continental would receive more United shares and a higher overall deal price, the sources said. Using United's method, the exchange ratio would be lower.
The price difference could be material in the talks.
United's share price has risen to USD$22.99 from USD$18.95 on April 7 when news of talks between United and US Airways first broke. The talks with US Airways have since ended. In that same time, Continental's stock has risen to USD$22.01 from USD$20.50.
Other aspects of the potential deal have already been agreed to, including naming United chief executive Glenn Tilton as chairman and Continental's head Jeffery Smisek as CEO, sources previously said.
The combined company would be named United, the NYT reported.