 US Airways last filed for Chapter 11 protection in September |
US Airways and America West, the seventh and eighth-largest airlines in the US, are merging in an effort to compete better with low-cost carriers. The merged firm, called US Airways, will become America's sixth-biggest airline in terms of passenger miles.
It will also receive $1.5bn (�816m) in new capital from a group of investors including European planemaker Airbus.
Both firms have had financial troubles, with US Airways seeking bankruptcy protection twice in two years.
America West is the stronger of the two at present after posting first-quarter profits of $33.6m, as against a $1.6m loss for the same period in 2004.
The new company will be based in Tempe, Arizona, the home of America West.
America West chief executive Douglas Parker will chair the new company, while US Airways boss Bruce Lakefield will be vice-chairman. Fewer planes
The two airlines have complementary networks, with US Airways serving the east coast and America West the western states.
Mr Parker said the combined company would be "the first nationwide, full-service, low-cost airline".
"A combined US Airways/America West places the new airline in a position of strength and future growth that neither of us could have achieved on our own," he said.
The newly-merged airline is expected to reduce the size of its 400-strong fleet by about 60 planes.
Further cost savings are expected to come from staff reductions, although Mr Parker said he did not anticipate major redundancies.
The merger is likely to put further pressure on other struggling US carriers such as Delta, Northwest and United, all of whom have announced cutbacks in recent months.
It is the first big US air industry merger since American Airlines took over bankrupt Trans World Airlines (TWA) in 2001.
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The first nationwide, full-service, low-cost airline
