US Airways said the deal would have boosted passenger choice

The proposed merger would have created one of the largest airlines in the US.

But creditors of Delta - which has been in Chapter 11 bankruptcy protection since 2005 after suffering severe financial problems - rejected the move.

US Airways said it was "disappointed" by the decision, saying it believed a combined airline would be more stable.

Separate ways

Delta hopes to exit Chapter 11 within months having overhauled its business, shedding thousands of jobs in the process.

Delta's board of directors had previously rejected its rival's offer.

But it was creditor backing for Delta's own recovery plan, based on the firm remaining independent, which prompted US Airways to withdraw.

"We would have created a better and more financially stable airline that offered more choice to consumers and increased job security to its employees," US Airways chief executive Doug Parker said.