More than $1 billion in annual cost savings is expected to flow out of the $11 billion merger agreed between American Airlines and US Airways by 2015.

Confirming the deal to create the world’s largest carrier by passenger numbers, the two airlines said the combined business expects to maintain all hubs and service to all destinations.

Under the agreement the US Airways name will go, with the new carrier flying under American Airlines colours.

The combined airline will offer more than 6,700 daily flights to 336 destinations in 56 countries.

Both airlines expect that the regional carriers they own – American Eagle and US Airways’ Piedmont and PSA – will continue to operate as “distinct entities,” to feed the new combine.

The carrier aims to enhance connectivity within the Oneworld Alliance including joint businesses with British Airways and Iberia across the Atlantic and with Japan Airlines and Qantas across the Pacific.

The new company will be headquartered in Dallas-Fort Worth and will maintain a significant corporate and operational presence in Phoenix.

Current American Airlines chief executive Thomas Horton will become chairman while US Airways boss Doug Parker will be chief executive.

American Airlines shareholders will own 72% and US Airways shareholders 28% of the combined company.

Horton said: “Today, we are proud to launch the new American Airlines – a premier global carrier well equipped to compete and win against the best in the world.

“Together, we will be even better positioned to deliver for all of our stakeholders, including our customers, people, investors, partners, and the many communities we serve.

“The combination of American and US Airways brings together two highly complementary networks with access to the best destinations around the globe and gives us a strong platform to provide our customers the most connected, comfortable travel experience available.

“The operational and financial strength of the combined airline is expected to enable continued investment in new products and technologies and will create exciting new opportunities for our people, even as we deliver strong cash flow and sustainable profitability.

“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.

“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, delivering not only the greatest value for our financial stakeholders, but also positioning us well for sustainable success over the long term.”

Parker said: “This merger will create a stronger company, with the path to improved compensation and benefits and greater long-term opportunities for all our employees.

“We are grateful to have the support of both companies’ unions and thank them and their leaders for their hard work and vision.

“We look forward to a bright future for our employees and enhanced service and choice for our customers. With today’s announcement, we start becoming one team and one new airline.”