The Star-Ledger article is correct; DL and CO discussed the possibility of a merger in January. DL CEO Mullin testified in front of Congress in March that if UA-US goes through, DL would seek a merger partner, probably CO.
I've argued many times on this forum that UA-US should be canned, and with it any of the inevitable subsequent supermergers (probably DL-CO, AA-NW). Bigness is not bad of itself. If these mergers were to promise lower (not just "frozen") fares and better service, no one would object.
Trouble is, there's a historical record--been there, done that. The last time the major airlines consolidated, 1987-1989, the resulting Big 6 stopped competing and became a cozy cartel, with two effects: 1) to screw medium and small size commuities with less service and unjustly high fares, and 2) to screw everybody with bad service. Big Three means Bend Over.
So any DL-CO potential merger should be canned with the others. They portend serious antitrust and consumer problems. All megamerger proposals should be thrown into the Potomac, along with all the overpaid airline CEO's and greedy union bosses.
If the Big 6 airlines were clean up their act--lower their fares (which the profits of the late '90s demonstrate conclusively, is an economic possibility), improve customer service, and behave towards low-fare carriers--for a long time--opposition to consolidation would subside. And they could enjoy the economic benefits of consolidation (and would presumably pass those benefits along to consumers and employees, as well as management and shareholders).
Til then, they can take a hike.
Need a new airline paint scheme? Better call Saul! (Bass that is)