The new airline would keep the US Airways name, but US Airways' headquarters in Arlington, Va., would be consolidated at America West's home offices in Tempe, Ariz. America West Chief Executive W. Douglas Parker would be chairman and CEO of the carrier. US Airways Chief Executive Bruce Lakefield would be vice chairman.

US Airways and America West disclosed last month that they were in merger talks, so the deal was not unexpected. The airlines said their goal was to create a lower-cost, full-service national airline that can offer discount fares and still turn a profit.

The merger agreement was reached after the companies secured $1.5 billion in additional financing from, among other sources, private institutional investors and the airlines' suppliers, including airplane maker Airbus.

US Airways currently is the nation's seventh-largest airline in terms of passenger traffic, with routes concentrated in the Northeast and along the Eastern Seaboard.

Its hubs include Charlotte, N.C.; Pittsburgh; Philadelphia; and Washington. The airline employs 30,100 people.

The routes of eighth-ranked America West consist of mostly east-west flights between its hubs in Phoenix and Las Vegas. It has 14,000 employees. Founded in 1983, America West has been through a bankruptcy reorganization.

"Both airlines suffer in that neither of us have truly national scale," Parker said at a news conference. The merger would solve that problem and provide a "consumer-friendly pricing structure across the United States on one airline," he said.

If nothing else, US Airways' fares generally should move down closer to those of America West, which already considers itself a discount airline, said Terry Trippler, chief executive of FareFacts.com, a travel Web site. "Air travelers all win" with the merger, he said.

But some analysts suggested that fares in some markets could rise, as the merger removes a rival from an industry that's already suffering from excess capacity, high jet-fuel prices and widespread fare-cutting.

Executives said the combined airline would prune service on unprofitable routes, which weren't immediately identified. The airlines also didn't name any cities for possible expansion.

Even if the combined carrier flies with lower costs and a stronger balance sheet, analysts said, it still must compete with discount king Southwest Airlines Co. and JetBlue Airways Corp., which have remained profitable.

In particular, Southwest has invaded important US Airways destinations in the East in recent years, sparking fare wars the struggling airline could ill afford.

The airlines said they hoped to complete their merger this fall.