American Airlines and US Airways officially announced an $11 billion merger on Thursday morning.
The new company, which will be based in Fort Worth and will be the largest in the world, will have more than 6,700 daily flights to 336 destinations in 56 countries, the carriers said.
"Today we are proud to launch the new American Airlines - a premier global carrier well equipped to compete and win against the best in the world," said Tom Horton, chief executive of American's parent company, AMR Corp.
Horton will become non-executive chairman and will step down after the carrier has its first annual meeting of shareholders and will continue in his position as chairman of the Oneworld alliance which American is a part of. US Airways chief executive Doug Parker will become chief executive of the new company and will assume the chairman title when Horton leaves the board.
Under the terms of the deal, US Airways stockholders will receive one share of common stock in the new company for one share of US Airways stock they own which will represent 28 percent of the equity in the new airline. AMR creditors will receive 72 percent of the equity in the new company.
Existing AMR shareholders, which would usually get nothing when a company recapitalizes in bankruptcy, will receive at least 3.5 percent of the ownership in the combined carrier.
The deal will need to be approved by the bankruptcy court as well as government regulators, the companies said. The deal is expected to close in the third quarter of 2013, according to a Securities and Exchange Commission filing made on Thursday.
"This merger will create a stronger company, with the path to improved compensation and benefits and greater long-term opportunities for all our employees," Parker said. "With today's announcement, we start becoming one team and one new airline."
The new combined airline will have about $40 billion in revenues in 2013 and the merger expects to generate more than $1 billion in annual net cost savings by 2015. The companies said they expect one-time transition costs of about $1.2 billion spread over the next three years.