The new airline, to be called Delta, will be based in Atlanta, and Delta chief executive Richard Anderson will head the combined company.
 
Volatile industry
 
The airlines said they decided to merge to create efficiencies that will offset soaring global fuel prices and enable the new carrier to better compete internationally.
 
"The new airline ... will provide a more stable platform for future growth in the face of significant economic pressures from rising fuel costs and intense competition," they said in Monday's statement.
 
Huge losses prompted both airlines in 2005 to file for bankruptcy protection.
 
It is thought the deal will incur job losses but numbers were not specified in Delta's statement. Together the airlines employ 80,000 people.
 
Many airline experts say mergers should help stabilise the industry, which has only just emerged from a five-year downturn costing $35bn in losses following the September 11, 2001 attacks in the US.
 
However the ongoing rise in fuel prices and the US economic downturn could prove detrimental to any gains.

Source: Agencies