NEW YORK (CNN/Money) - Merger talks between US Airways Group Inc. and America West Holdings Corp. picked up momentum last week, according to a published report, as the two sides try to hammer out a deal before America West's annual meeting May 17.

The Wall Street Journal reported Monday that several potential investors in such a possible deal are studying a proposed business plan. That plan foresees the combined airline operating under the US Airways brand and focusing attention on Midwestern markets while introducing flights to Hawaii.

The two sides confirmed talks on a possible deal last month. US Air, the nation's No. 7 carrier in terms of traffic, is operating under bankruptcy court protection for the second time. America West, the nation's No. 8 carrier, has been more successful than most of the traditional carriers that operate a system of hubs and spokes in transforming itself to a low-fare, low-cost carrier.

The deal would need new equity investors to help fund US Airways' exit from bankruptcy-court, according to the paper. The paper quoted people familiar with the matter as saying the goal is $500 million in new cash, but a merger agreement could come with just $375 million of initial equity attached.

The talks need the agreement of a wide range of parties, according to the report, including the federal government, which has an equity stake in US Air due to federal loan guarantees granted after the Sept. 11 terrorist attack, as well as General Electric Co. (Research), the largest creditor of both carriers.

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