Chinese pedestrians walk past a large billboard advertising Continental Airline, which services several of China's major cities, in downtown Beijing on May 21, 2007. (UPI Photo/Stephen Shaver)

HOUS, Texas, May 15 (UPI) -- Texas-based Continental Airlines, which issued a blanket rejection of merging in April, is discussing an alliance with United Airlines, sources said Thursday.

United is currently in merger talks with US Airways, but still discussing service agreements with Continental, the Houston Chronicle reported.

American Airlines and British Airways -- part of a carrier alliance called Oneworld -- have said they are willing to discuss service agreements with Continental.

Continental is attractive to other airlines because of its dominance in the New York City market and its connections to Latin America, the Chronicle reported.

Alliances also allow airlines to increase services without facing regulatory scrutiny involved in a merger.

"We are examining our alliance relationships as we think it's important that we be a major player in one of the three major global airlines alliances," Continental spokeswoman Mary Clark said this week.