These parties have been following AMR's bankruptcy proceedings closely to evaluate prospects for a merger or tie-up with American Airlines, the sources said.

The sources and airline experts, however, cautioned that any deal is unlikely to materialize before AMR is close to completing its court restructuring, which could take a year or longer.

"At this point I wouldn't take it a bit serious. But if AMR does the restructuring correctly, I think it's going to be a very attractive target," said Ray Neidl, aerospace analyst with Maxim Group.

Delta hired Blackstone as its financial adviser to assess a bid for American Airlines, one of the sources said.

REGULATORY HURDLES

Delta has conducted an antitrust analysis on a possible tie-up with AMR and concluded that with some concessions, such a deal has a good chance of gaining approval from regulators, according to The Wall Street Journal, which first reported Delta's interest in AMR.

Morningstar airline analyst Basili Alukos said a Delta-AMR deal would require huge concessions of gates and routes to make a merger palatable to regulators.

"I can't imagine it would happen without massive concessions because they're such large carriers, given that there have already been so many large-scale mergers in the airline space," Alukos said, referring to the 2008 merger of Delta and Northwest and the 2010 merger of United Airlines and Continental Airlines.

Alukos said it is more likely that AMR will eventually merge with a smaller carrier like US Airways, because that deal would hit fewer regulatory snags.

Neidl agreed, saying: "If I were a gambling person, I'd have to bet on a TPG-US Airways deal over a Delta deal."

Sources have told Reuters that while some assets such as American Airlines' Latin American routes could be attractive to Delta, any takeover attempt for the full company has a remote chance of winning antitrust approval.

AMR A TAKEOVER TARGET

Speculation on a possible airline merger involving AMR has been rampant since the No. 3 U.S. airline filed for Chapter 11 protection from creditors in November.

Neidl said it is also possible that AMR could be sold in parts, but he said it was too early to know if that is likely.

Representatives for Delta, AMR, Blackstone and TPG all declined to comment.

US Airways has consistently declined to comment on its prospects for an AMR merger. A spokesman again declined to comment on Thursday.

US Airways was formed from a 2005 merger with America West Airlines and its leaders have long advocated consolidation. Many experts believe US Airways will attempt a merger with AMR.

The U.S. airline industry, battered for years by overcapacity and volatile fuel costs, has found renewed stability recently because of capacity cuts and mergers.

Proponents of airline consolidation say mergers are an effective remedy for overcapacity. But AMR has long said it can succeed as stand-alone carrier.

In December, AMR Chief Executive Tom Horton warned employees in a letter that "opportunists" could attempt a merger with the airline as it restructures.

"We will have some input in the process from several interested parties, and we need to get used to that," Horton said in the letter.

(Reporting by Greg Roumeliotis and Kyle Peterson, additional reporting by Soyoung Kim and Karen Jacobs; editing by Mark Porter and Matthew Lewis)

• A Permanent Economic Emergency