Continental and United airlines have been discussing a potential merger - the latest in a series of signs that major carriers are seeking to reshape the recovering industry, The Washington Post reported Wednesday.

The talks have involved top executives of each company and have touched on the potential structure and shape of a combined carrier, industry sources familiar with the discussions said yesterday.

Those sources, who spoke on condition of anonymity because they were not authorized to discuss the potential deal, said the discussions intensified last month after US Airways Group announced an unsolicited 8.7 billion dollars bid to merge with Delta Air Lines, which is in bankruptcy protection.

Chicago-based United is the nation's fourth-largest carrier in terms of passenger traffic and is strong in the Midwest and Asia. Its parent company, UAL, has a market capitalization of about 4.8 billion dollars.

Houston-based Continental is the nation's sixth-largest carrier and has strong links to Europe, the Caribbean and Latin America. It has a market capitalization of about 3.9 billion dollars.

A merger could face a number of obstacles, including a review by federal regulators. Also, Northwest Airlines has an agreement with Continental that in many cases would give Northwest the power to block a merger.

Airline executives have been speculating in recent months about the possibility of combining operations of the nation's six traditional carriers -- American, Continental, United and US Airways, as well as Delta and Northwest, both in bankruptcy protection.