SAN FRANCISCO (MarketWatch) -- After a week of negotiations, Delta Air Lines and Northwest Airlines may be set to reveal merger plans as early as Tuesday, according to a media report Sunday.

The merger would expand Delta's access to the fast-growing Asia market and create one of the world's largest carriers.

A combination of Delta DAL, -2.32% and Northwest NWA, -0.55% would have nearly $30 billion in annual revenue and about 80,000 employees, knocking American Airlines parent AMR Corp. AMR, from its position as the No. 1 U.S. airline and posing a challenge to the world's largest, Air France-KLM AFLYY, -4.76% .

Delta was in talks over the weekend with its pilots, whose support of the deal may not be pivotal to the companies' merger announcement as previously believed, The Wall Street Journal reported in its online edition, citing unnamed people familiar with the matter. See Wall Street Journal story (subscription required)

Talks with Northwest's pilots are to take place at a later date.

Delta previously had said it wouldn't agree to merge without its workers' approval, and it remains unclear if Delta would move forward if its pilots opposed the deal, according to the report.

A merger between Delta and Northwest has been in limbo since January because pilots couldn't come to a compromise on seniority, which ultimately determines a pilot's pay.

The deal still could be scuttled or prolonged as the airlines seek accord with the other company and their own labor unions, the Journal said.

A Delta-Northwest deal would be a surprising achievement after weeks of investor hand wringing as pilots attempted, failed and attempted again to reach an agreement over how to integrate their seniority lists.

Additionally, it has the potential to kick-off a new round of consolidation in the troubled industry, though antitrust regulators at the Department of Justice will have to weigh in first.

Both airlines' stocks have had a volatile run since emerging from bankruptcy last spring, with shares trading significantly below their 52-week highs on concerns the cooling economy could translate into less travel spending.

According to earlier reports, the new company would keep the Delta name and be based in Atlanta, with the current Delta CEO, Richard Anderson, in charge.

The proposed merger would give Delta a broader route network that could challenge rivals with more single-airline services and expands its access to Asia, a market some analysts believe is poised for substantial growth over the next ten years.

It also gives the carrier opportunities to weed out any unprofitable routes it might share with Northwest and increase its pricing power within certain markets. That's an important part of the deal that many analysts believe well help the surviving company to offset the sharp rise in fuel prices that have put several smaller carriers out of business in recent weeks.

However, antitrust regulators at the Department of Justice will look closely at exactly those types of opportunities before weighing in on whether the deal is anticompetitive. United parent UAL Corp.'s UAUA proposed takeover of U.S. Airways LCC, in 2000 was blocked by the department on similar grounds along with concerns that the combination could trigger additional mergers.

It's already widely expected that a Delta-Northwest merger would initiate further consolidation among major carriers. Indeed, by agreeing to consolidate, Northwest has effectively given up a so-called golden share it held in Continental Airlines CAL, -2.48% , freeing its rival to pursue a deal of its own, possibly with UAL.

Once Delta and Northwest file notice with the agency, the Justice Department has 30 days before requesting additional information if the merger raises concern. The agency generally determines whether an airline merger is anticompetitive by looking at overlapping city pairs to calculate the post-merger company's market share.

If the department decides it's not in the country's best interest for Delta and Northwest to merge, it could delay any industry consolidation for at least another year.

It's possible for the deal to vaporize even before reaching the DOJ, as when UAL attempted to merge with U.S. Airways LCC, . UAL dropped the idea in January, 2007 because of vocal opposition among some politicians.

Already state and federal forces are lining up against a Delta-Northwest tie up. Minnesota politicians, including U.S. Sen. Norm Coleman and Gov. Tim Pawlenty, both Republicans, who have expressed concerns that a merger would take away state jobs and tax revenue. Last month Pawlenty also reminded Northwest of its commitments to keep its headquarters and a hub in the state.

Also against the merger has been U.S. Rep. Jim Oberstar, D-Minn., head of the House Transportation and Infrastructure Committee.

"Further consolidation is not in the overall public interest," Oberstar said in a January conference call with reporters. "It reduces competition and it reduces services to the smaller communities. We did not regulate the airlines in 1978 to create consolidation, but to expand competition."

So far Delta and Northwest have played their consolidation strategy very carefully, sewing up contract agreements from its pilot union before proceeding. More difficult has been integrating the company's seniority lists - important for establishing pilot routes and pay levels.

Many analysts have said labor has the potential to make or break any airline consolidation as post-merger company will be dependent on employee cooperation and motivation to compete in a sector crowded with domestic and overseas rivals. See related story