CHARLOTTE, N.C. ( TheStreet) -- US Airways ( LCC) and bankrupt American ( AAMRQ.PK) made it official Thursday, saying their boards have jointly approved an $11 billion merger that would create the world's largest airline.

"Today marks an exciting new chapter for American Airlines and US Airways," said Doug Parker, the US Airways CEO who will become CEO and a board member of the new company, in a prepared statement.

"American Airlines is one of the world's most iconic brands," Parker said. "The combined airline will have the scale, breadth and capabilities to compete more effectively and profitably in the global marketplace."

The carrier is expected to have annual revenue of about $40 billion, based upon combined 2013 performance. The transaction is expected to generate more than $1 billion in annual net synergies in 2015, including $900 million in network revenue synergies, with estimated cost synergies of about $150 million, net of the impact of the new labor combined contracts at American Airlines and US Airways.

The companies expect one-time transition costs for the merger of approximately $1.2 billion, spread over the next three years. The transaction is projected to be significantly accretive to EPS for US Airways shareholders in 2014.

The combined airline will offer more than 6,700 daily flights to 336 destinations in 56 countries. It will retain all existing hubs operated by the two carriers. Dallas/Fort Worth will be the headquarters and home to the largest hub; Charlotte will be the second largest hub, and Phoenix, the current headquarters for US Airways, will retain "a significant corporate and operational presence," the companies said.

Parker praised AMR CEO Tom Horton, who will be chairman through the first annual meeting, when he will then depart, enabling Parker to become chairman. Horton, focused on having American emerge independent from bankruptcy, had resisted the merger for months.

"Today's announcement is possible only because of the important work carried out over the past year by Tom Horton and the American team," Parker said. "No one cares more about the long-term success of American Airlines and its people than Tom. Through a successful restructuring and this merger, Tom and the American team have established an excellent foundation for the new American Airlines to become a premier global airline."

The new board will initially be made up of 12 members, including Horton and two other American Airlines representatives; Parker and three other US Airways representatives; and five representatives of the AMR creditors committee.

"Over the past year, the American team stood tall as we established a rock solid foundation for long-term success through an efficient and effective restructuring," Horton said. "As part of this process, after months of exhaustive analysis and a thorough review of all alternatives, we concluded that this merger is the best outcome for our company.

" I look forward to working closely with Doug Parker, whom I have known as a friend for more than 25 years, and with the leadership teams of both companies to assure a smooth integration and the creation of a new industry leader," Horton said.

Existing US Airways stockholders will receive one share of common stock of the combined airline for each share of US Airways common stock then held: in sum, they will hold 28% of the new company, while the remaining 72% will be issued to stakeholders of AMR and its debtor subsidiaries. In an unusual development for airline bankruptcies, shareholders in bankrupt AMR will receive at least 3.5% of the combined company. They would receive more than 3.5% if other claims are first paid in full.

"It is unusual in Chapter 11 cases -- and unprecedented in recent airline restructurings -- for shareholders to receive meaningful recoveries," Horton said.

The plan requires approve by the U.S. Bankruptcy Court in New York, by US Airways shareholders and by regulators. The combination is expected to be completed in the third quarter of 2013.

The carrier expects to provide the most service of any carrier on the East Coast and in the central regions of the U.S., to expand its presence in the West, to bolster American's dominant position in Latin American and the Caribbean and to serve 21 destinations in Europe and the Middle East. US Airways will shift from the Star Alliance to the Oneworld Alliance, in which American is a founding member.

The carrier will take delivery of more than 600 new aircraft, including 517 narrowbodies and 90 widebodies, from Airbus and Boeing over the next decade.

In the immediate future, no changes are planned to the two carriers' frequent flyer programs, the carriers said. "Upon merger approval, additional information will be provided to customers of both frequent flyer programs on any future program updates, including account consolidation or benefit alignment," they said.

-- Written by Ted Reed in Charlotte, N.C.

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