Talk about some sort of a combination between US Airways and America West Airlines, the seventh and eighth largest carriers in the United States, continues to surface despite refusals by either company to lend credence to the speculation.

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JP Morgan airline analyst Jamie Baker fueled the latest round of rumors in a research note Friday that referred to "early speculation" about a proposed "linkage" between Phoenix-based American West and Arlington, Va.-based US Airways.

He did not elaborate, and Baker could not be reached yesterday. But he joins a list of industry observers who have raised the possibility of a deal marrying America West's stronghold in the West with US Airways' large East Coast presence.

There is "very little overlap" between the two carriers, local airline analyst Bill Lauer said yesterday.

What's more, America West Chief Executive Officer Doug Parker suggested in February that he would "look aggressively" to purchase a rival carrier and that he wanted to add new routes on the East Coast. He said the number of low-cost carriers in the United States would shrink from seven or eight to two or three, and he expected America West to be one of the survivors.

One link between America West and US Airways is John Luth, chief executive officer of New York consultancy Seabury Group, a specialist in airline finance and airline restructurings.

Luth helped US Airways through its first bankruptcy and he is doing the same in its second, making at least $15 million in fees for his firm.

Luth also was a close adviser to America West in the days after 9/11, when the airline nearly collapsed. Luth helped the airline restructure its debt and win financing backed by the federal government.

But Lauer said a combination between US Airways and America West is not possible without the intervention of a third party willing to put up enough money to carry the relationship forward and protect against a continued rise in fuel prices.

Baker said in his research note Friday that America West's cash could fall as low as $60 million by the end of the year without a new infusion of capital. US Airways also has little left in the till, despite a $125 million investment from commuter carrier Air Wisconsin Airlines and $125 million commitment from Republic Airways.

"You can play all the mind games you want," Lauer said. But until a third party steps forward, "this is just so much gamesmanship."

Neither carrier cared to address the speculation directly yesterday.

"That is a market rumor," America West spokesman Carlo Bertolini said of the speculation linking it with US Airways. The company is "unable to comment on market rumors. We are focused right now on running the best airline we can here in Phoenix."

With record-high fuel prices and weak revenues pummeling the industry, "we would expect that all airlines are exploring ways to remain competitive," said US Airways spokesman David Castelveter. "We will not, however, begin responding to rumors or speculation regarding possible conversations with potential business partners or investors."