(UAL) - Get Report

, parent company of the world's largest airline,

United Airlines

, said on Wednesday that it had agreed to acquire

US Airways

(U) - Get Report

for $4.3 billion in cash.

Under the terms of the deal, UAL will pay $60 a share for all the outstanding shares of US Airways, the nation's sixth biggest airline. That represents a premium of 130% based on US Airway's closing price of 26 5/16.

Shares of US Airways shot up 23 9/16, or 90%, to 49 7/8 in pre-opening trading, according to


. (US Airways finished up 22 11/16, or 86%, at 49.) Shares of United, which closed at 60 3/8 on Tuesday, were not active.

UAL will also assume $1.5 billion of US Airways debt and $5.8 billion in aircraft operating leases.

"The combination of United and US Airways will deliver significant benefits to millions of passengers and hundreds of communities throughout the United States," the companies said in a joint statement.

In order to assuage any concerns regarding the possibility of diminished competition in certain markets, United said it has plans to sell some of its assets to a US Airways board member, Robert Johnson. Johnson, the founder, chairman and chief executive of

BET Holdings II

, would then create a new airline, to be called

DC Air

, which would operate out of Washington Reagan National Airport.

The companies did not disclose how much Johnson would be paying for the carrier's assets.

UAL and US Airways said they expected to complete the deal in 2001. The purchase will be accretive to United's earnings in the second year following the closing, the companies said.