ON FRIDAY, AMR Corp, the parent company of bankrupt American Airlines, announced that it will consider merging with another airline as part of a plan to emerge from bankruptcy. Most outside observers have expected this for some time—United Airlines, which absorbed Continental, and Delta Air Lines, which merged with Northwest, are now significantly larger than American. But Thomas Horton, AA's CEO, had long maintained that he'd like American to emerge from bankruptcy as an independent company. By agreeing with its creditors to consider merger options, AA is acknowledging that such a deal may be more likely than Mr Horton had hoped.

US Airways, which came to an agreement with American's three biggest unions last month, is the most likely merger partner for American. US Airways says its merger plan will save more jobs than AA's plan to emerge as an independent airline, and the unions have agreed to support a US Airways bid. That deal put a lot of pressure on American to at least consider a merger, and although US Airways hasn't made an official bid, outside analysts have cited multiple potential synergies between the two companies' networks. Here's the relevant section from the bottom of the Associated Press story on the latest developments:

Standard & Poor's, citing a Bloomberg News report earlier Friday, said news that AMR would consider a merger as an alternative to its stand-alone restructuring plan made it more likely that US Airways will acquire or merge with AMR. S&P analyst Jim Corridore said a merger would fix US Airways' weak international network and give it size to compete with bigger rivals.

As Gulliver noted in January, a US Airways-American merger also arguably presents fewer potential regulatory hurdles than a Delta-American deal. But don't mistake this latest news for a sign that a deal is done or inevitable. US Airways has mounted failed takeover attempts before, and the support of American's unions and the fact that American is considering a merger doesn't mean that one will happen, or that if one does, it will be with US Airways. There's still a lot of negotiation ahead. This news is a sign that the process is moving forward; all else is still up in the air.