Delta Air Lines and United Airlines are a step closer to creating the world’s largest air courier, and hedge fund Pardus Capital Management couldn’t be happier.

The $3 billion New York fund manager sent a letter to both airlines urging them to commence merger talks. And although both denied that talks have begun, Delta CEO Richard Anderson said his company has set up a special committee to explore its options, though he said Pardus’ claim that Delta must merge or die is “inaccurate and ill-founded.”

Pardus, which owns 7 million Delta shares and 5.6 million shares of United parent UAL Corp., said it also considered a Delta merger with Continental Airlines and Northwest Airlines. According to the Pardus letter, a Northwest merger would create the greatest net synergies of $1.5 billion, but could result “in the need for a potential follow-on transaction at a later date.” A Continental deal would produce no synergies.

The hedge fund said a merged Delta and United would result in $585 million in synergies and “more network breadth than any other transaction.”

“We believe it is imperative that you seek to enter into a merger transaction with another carrier given the rapid rise in fuel prices and the increased risk to the business as a stand-alone entity,” Pardus President Karim Samii and principal Shane Larson wrote.