Loss making carriers United Airlines and Continental Airlines today confirmed they would merge to become the world's biggest airline.
The deal, which is subject to regulatory approval, would create an airline with the largest global market share and annual revenues in excess of $29 billion.
At a press conference the companies' chief executives said they expected the merger to save $1 billion a year.
The Continental name will be ditched, though its colours will be integrated into the new United Airlines' livery, and the company will be headquartered at United's Chicago offices.
However, Continental boss Jeff Smisek will become chief executive of the new company, while United's Glenn Tilton will be non-executive chairman.
Tilton said: "We are creating a stronger, more efficient airline, both operationally and financially, better positioned to succeed in a dynamic and highly competitive global aviation industry."
Some job cuts to the 86,000-combined work force are to be expected, but both bosses said front-line staff would be "minimally affected."
Stocks in both airlines rose this morning after the announcement was made to the New York Stock Exchange.
It is the second time in less than two years that US legacy carriers have decided to merge, after Delta Air Lines and Northwest announced a tie-up in 2008.
British Airways also recently announced a merger with Spanish carrier Iberia and American Airlines.