When Delta Air Lines' board of directors holds a regular meeting starting Thursday, it's a good bet they'll be talking about Northwest Airlines' attempt to revive a proposed merger.

Delta's board is expected to meet Thursday and Friday, according to two people familiar with the matter.

The meeting comes about a week after Northwest suggested to Delta's management that the two carriers proceed with a merger pact, but offer fewer incentives to win support from pilots whose feud over seniority stalled an earlier deal.

Meanwhile, Pardus Capital Management, a hedge fund that has been pushing Delta to combine with another airline, told investors this week that it is freezing investor redemptions because of a steep decline in the value of its stock holdings.

The New York-based investment fund, which held 7 million Delta shares at year-end, turned up the heat on merger speculation around Delta last November when it urged the company to pursue a merger with United Airlines.

The fund, which has about $2 billion invested in a handful of stocks, including Delta and United, is down about 40 percent from its peak last year, according to a person with knowledge of its operations. He said the fund has not changed its investments in the airlines.

A Delta spokeswoman wouldn't verify Delta's planned board meeting or any developments in the on-again, off-again merger discussions, which began last fall.

However, industry analysts said Delta's board is almost certain to examine Northwest's latest proposal as the conditions in the industry have deteriorated.

"I'm sure they will. There's an offer," said Ray Neidl, a New York-based analyst with Calyon Securities. "I'm betting no deal without the pilots," he added, because Delta Chief Executive Richard Anderson told employees in late February that any merger would have to protect the seniority of employees.

"They've got a very good relationship with their pilots and they don't want to endanger that relationship," Neidl said.

Delta and Northwest, which never publicly confirmed they were in talks, came close to announcing a deal but it stalled while the pilots unions at the two carriers tried unsuccessfully to hammer out a related agreement on how to merge the two groups' seniority lists.

The airlines offered pilots pay raises and a stake in the merged companies if they worked out such differences ahead of time to avoid later delays or operational problems stemming from political and employee opposition. US Airways and America West did not get pre-merger agreements from their pilots before they combined in 2005. Today, those pilots still are working under separate seniority lists and contracts, weighing down operational integration.

Robert Mann, an aviation consultant in Port Washington, N.Y., said soaring jet fuel costs, a likely recession and a spreading credit crunch have given the airlines plenty of reasons to go back on such commitments and strike a new deal that doesn't give pilots a pay raise or other perks.

"Things change. The deal that looked rational at $95 [per barrel] fuel doesn't look so rational at $110," Mann said. He added that it's "very much in Northwest's interests" to proceed because the carrier's aging fleet gives it less flexibility to restructure its domestic network to offset worsening travel market conditions.