US Airways and American Airlines are joining forces in an $11 billion deal that will create the world's biggest airline.
The merger comes just 14 months after American Airlines filed for bankruptcy.
The new airline will keep the American Airlines name and will service more than 180 million passengers a year.
The new super airline will also have ties to Qantas.
The chief executive of American Airlines Tom Horton detailed the plans at a news conference at Dallas/Fort Worth International Airport.
"Through the merger of American and US Airways we are creating a premier global carrier," he said.
"By combining the strengths of both companies we will be delivering the most value to our owners and the greatest benefits to our customers and our people." The merger will help lift American Airlines out of bankruptcy and has come after months of negotiations with creditors.
Tom Horton says the combined airline will offer more than 6,700 daily flights to more than 300 destinations in 56 countries.
"With the largest global network, strong hubs, the best alliance partners and an even stronger oneworld [alliance], the most modern fleet, a solid financial foundation and the finest team of people in the industry, we will once again be an industry leader worthy of the name American Airlines, America's flag carrier," he added.
The new airline will be based in Dallas and will be part of the oneworld alliance, which includes British Airways, Japan Airlines and Qantas.
US Airways chief executive officer Doug Parker will run the new company, and was asked whether the merger could result in higher airfares.
"The over 900 routes that we fly individually, when you add them up, there are only 12 of them where we have overlap.
So this really is about taking two airlines, putting them together and providing better service to customers," he responded.
"It also, I would note, creates a nice third competitor to the two large airlines.
So our view is that it increases competition, it doesn't decrease competition." The American Airlines and US Airways merger is the latest of many in the US - including Delta and North West, and United and Continental.
The chairman of the Centre for Aviation Peter Harbison says it was an obvious move.
"This will be the last because there is really nobody left to merge now, with the exception of the independent Southwest low cost airline," he explained.
"It's been happening basically because the US industry was really overweight, inefficient, and each one of these carriers of the six, now three, has been through a process of bankruptcy, chapter 11 bankruptcy, which has allowed them to restructure, downsize, reduce costs right across the board.
"That said, there's still quite a lot of inefficiency, and these carriers are probably going to continue making money more because they're big and have a lot of market power than because they are particularly efficient." The deal will have to be approved by regulators, which could take several months.