Photo: The Canadian Press. All rights reserved.

A US Airways jet taxis past an American Airlines jet parked at the gate at Sky Harbor International Airport in Phoenix. The merger of US Airways and American Airlines has given birth to a mega airline with more passengers than any other in the world. (AP Photo/The Arizona Republic,Tom Tinkle, File) MARICOPA COUNTY OUT; MAGS OUT;

American Airlines and US Airways will merge and create the world's biggest airline. The boards of both companies approved the deal late Wednesday, according to four people close to the situation.

The carrier will keep the American Airlines name but will be run by US Airways CEO Doug Parker. American's CEO, Tom Horton, will serve as chairman of the new company until mid-2014, these people said. They requested anonymity because the merger negotiations were private.

The merger caps a turbulent period of bankruptcies and consolidation that will leave the U.S. airline industry dominated by four big carriers — American, United, Delta and Southwest. Together they would control almost three-quarters of U.S. airline traffic.

The deal has been in the works since August, when creditors forced American to consider a merger rather than remain independent. American has been restructuring under bankruptcy protection since late 2011. AMR creditors and possibly its shareholders will own 72 per cent of the stock, and US Airways Group Inc. shareholders will get the rest, three of the people said.

A formal announcement is expected Thursday morning.