updated 2/26/2008 5:35:39 PM ET 2008-02-26T22:35:39

Delta Air Lines Inc.'s top two executives told employees Tuesday that the nation's No. 3 carrier has not yet arrived at a potential combination transaction that meets all of its principles.

The memo to employees from Delta Chief Executive Richard Anderson and President Ed Bastian was issued as talks between the Atlanta-based company and Eagan, Minn.-based Northwest Airlines Corp. have been hampered by an inability by their pilots unions to reach a deal on integrating seniority lists.

The executives said the company's criteria for any potential deal include protecting the seniority of Delta employees and creating greater job security.

Other conditions include that the combined airline be called Delta and be headquartered in Atlanta. Officials familiar with the talks have said those criteria have already been met, as have most other issues, except for pilot integration.

"Rest assured that we will not complete a transaction unless all of these conditions are met," the Delta executives said in the memo. "We have a strong stand-alone plan. We will maintain our attention on executing that plan while we continue to look at strategic alternatives."

Not too long ago, Delta and Northwest seemed all but certain to announce a combination soon.

That still could happen, but the pilot impasse has jeopardized a deal. Neither side has suggested they are ready to walk away, but there has been a public and private silence in recent days from many people familiar with the deal.

Industry observers say that if a Delta-Northwest combination falls through, the two airlines could stay independent, seek a quick deal with another carrier or wait until next year to try the consolidation game again.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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