Delta Air Lines agreed to buy Northwest Airlines for about $3 billion, effectively challenging reluctant pilots at both carriers to resolve their dispute over reconciling seniority at a combined company.

Under terms announced Monday evening Delta agreed to swap 1.25 of its shares for each Northwest share. Based on Delta's closing price of $10.48 a share on Monday, the offer values each Northwest share at $13.10, a 16.8 percent premium over their close Monday.

Based on Northwest's recent disclosure that it has 236.43 million shares outstanding, the Delta offer values Northwest at $3.097 billion.

Several news reports on Monday said a deal was imminent, driven by the rapid rise in oil prices over the last year.

Rising fuel costs have forced four small airlines into bankruptcy in recent weeks.

Delta and Northwest acknowledged the effect of higher oil prices when they announced their intention to merge.

"Record fuel prices have fundamentally changed the economics of the airline industry," they said in a statement. "Fuel is the highest single expense for Delta and Northwest, significantly eroding the financial benefits of restructuring and placing the airlines' new found strength and stability at long-term risk.

"At the beginning of 2007, oil prices were approximately $55 a barrel," they added. "Now, oil prices have nearly doubled. This dramatic run-up in the price of oil makes the transaction even more compelling."

A merger would let the combined company cope with high fuel costs by generating what it said would be "more than $1 billion in annual revenue and cost synergies" from reduced overhead, and improved operational efficiency.

Sensitive to the specter of job losses and service cuts, the companies went out of their way to add: "The merged airline will maintain all hubs at Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York-JFK, Salt Lake City, Amsterdam, and Tokyo-Narita—each of which will benefit from improved global connectivity."

Still, a deal would require the airlines to integrate, if not reduce, their workforces—particularly their pilots. Representatives for Delta's 6,000 pilots met last weekend in Atlanta, where Delta is based, while union leaders of Northwest's 5,000 pilots have called a meeting in Minneapolis, home of Northwest.

The main sticking point for both pilot groups appears to be seniority lists. The lists are important to pilots because they determine scheduling and routing priorities in addition to ranking for pay.

The pilot groups can't formally block a merger, but they can complicate the process. U.S. Airways and America West Airlines have been trying to combine operations for two years, but have been unable to resolve issues related to pilot seniority, the New York Times noted.

Delta chief executive Richard Anderson would run the merged airline, which would be called Delta. Delta Chairman Daniel Carp would keep that title, while Northwest Chairman Roy J. Bostock would become vice chairman. Another Delta executive, Edward H. Bastian, would be president and chief financial officer.

Delta would have seven of 13 seats on the combined board. Northwest would get five seats, one held by Bostock and another by current Northwest C.E.O. Douglas M. Steenland. One director will come from the Air Line Pilots Association.

The new airline would have its headquarters in Atlanta, but has pledged to keep "significant jobs, operations and facilities in Minnesota."