American Airlines and US Airways poised 'to merge'

American Airlines and US Airways are planning to form one of the world's biggest airlines, according to media and newswire sources.

The two boards are said by a number of unnamed sources to have met on Wednesday to approve the merger.

A formal announcement is expected on Thursday.

The merger will bring American Airlines closer in value to rival Delta Airlines, with an estimated market valuation of $11bn (£7bn).

The lion's share of the new company will be owned by American Airlines' bankruptcy creditors, who will have 72% of the company, the reports say.

Agreement

American Airlines' parent company filed for bankruptcy protection more than a year ago.

With a history stretching back 80 years, five years' ago, American had grown to be the world's biggest airline.

It was a pioneer of the loyalty programme for frequent fliers and also brought in the system of sliding prices according to demand.

But deep losses pushed the company into bankruptcy, with the company blaming labour costs and the unions blaming poor management.

US Airways, by contrast, has been profitable in recent years.

The two companies have been in discussions since last August when they signed an agreement to exchange confidential information.

The carrier will be run under the American Airlines brand, but the chief executive is expected to be the current US Airways boss, Doug Parker.

Not including affiliates, it will have around 900 aircraft and run more than 3,000 flights, employing 100,000 people.

The reported deal would need approval from competition regulators and a US bankruptcy court before going ahead.

After that, it could be years before passengers notice any changes.

The deal follows a period of intense consolidation for the US airline sector, with Delta hooking up with Northwest and Continental with United.