Now that Delta Air Lines (DAL) and Northwest Airlines (NWA) have officially announced their tie-up, the urge to merge is sweeping the rest of the airline sector. A report in yesterday's Chicago Tribune states that U.S. Airways (LCC: sentiment, chart, options) and United Airlines parent UAL Corp. (UAUA: sentiment, chart, options) are close to joining forces.

The report states that United's top brass will likely step aside in deference to LCC's reigning duo, CEO Doug Parker and president Scott Kirby. However, the newly created company would remain in United's home base of Chicago. If the alleged merger goes through, the UAL/LCC combo would be second in size only to the Delta/Northwest hybrid.

In today's trading, airline stocks are benefiting from a minor pullback in oil prices. June-dated crude reached another record high of $126.40 per barrel this morning, but has since lost ground and is now trading south of the 125 level. As we head into the afternoon, LCC is up nearly 2% while UAUA has gained 2.4%. The broader AMEX Airline Index (XAL) is up 1.4%.