Terms of the deal would give AMR Corp. creditors, workers and equity holders 72% of the combination, which would be worth about $11 billion, with US Airways shareholders receiving the rest. The deal would leave a big four of American, Delta Air Lines Inc., United Continental Holdings Inc. and Southwest Airlines Co. with control of an estimated 88% of domestic seats. And according to advocates it would at long last position the U.S. airline industry, which has failed to earn back its cost of capital since the early 1980s, to deliver sustainable returns for shareholders.

A deal between the two airlines seemed a long shot when AMR filed for bankruptcy in November 2011, but a relentless courtship by US Airways chief executive Doug Parker, who will head the combined entity, won over American creditors and employees and helped facilitate a deal.

AMR officials said Thursday the deal, and not emerging as a standalone, was in the best interest of the airline's employees, creditors and customers.

"We said all along our No. 1 focus is creating value for stakeholders and creating the best outcome for all involved," AMR senior vice president and chief commercial officer Virasb Vahidi said in an interview. "This deal, which includes full recovery for unsecured creditors and a mechanism to allow equity holders to have some recovery, is clearly the right outcome."

The airline industry has long been restructuring and consolidating, with nearly 200 bankruptcy filings and nearly an equal number of deals in the decades since the U.S. government lifted route restrictions and left carriers free to compete. US Air, which itself has been through bankruptcy twice, has long been the runt of the litter, an amalgamation of smallish, struggling carriers including Allegheny Airlines, Piedmont Airlines, Pacific Southwest and the Trump Shuttle.

This latest deal likely ends a wave of consolidation sparked by Parker in 2005 when his America West Holdings Inc. bought the larger US Air out of bankruptcy. That combined company, which kept the US Airways name, in 2007 made an unsuccessful run at Delta Air Lines when that company was in bankruptcy and later held talks with United Airlines Inc. parent UAL Corp. Both of those airlines looked elsewhere, with Delta buying Northwest Airlines Corp. and UAL merging with Continental Airlines Inc.

With US Airways and AMR set to become one, the list of legacy airlines will have shrunk from six to three in less than a decade. While analysts say that smaller carriers including Alaska Air Group Inc., Hawaiian Airlines Inc. and even discounters such as JetBlue Airways Corp. might eventually fit into one of the titans' networks, especially in the event of another slowdown that cuts into valuations or causes any one of those companies distress, the heavy lifting is now done.

"A scenario does not exist where American, Delta United or Southwest would be allowed to buy one another," a transports banker said Thursday. "It isn't even worth a thought."

Dealmaking could continue beyond U.S. borders. Regulations in the U.S. and overseas prevent full-blown crossborder consolidation, though international airlines have been allowed to form antitrust-immune joint ventures and are increasingly aligning in three global alliances. Delta and AMR have also in recent years taken minority stakes in partner airlines in Mexico, South America, Asia and Australia.

The banker said that restrictions could eventually be eased should countries wish to attract new capital to their transportation systems, and predicted that there would eventually be a wave of crossborder deals. "But that is well into the future," he said. "For now, AMR-US Air is the best we have to look forward to."

Of course, first those airlines have to get their merger closed. Passenger groups are expected to mobilize against the transaction, which they say could cause fares to rise and small markets to lose service.

"From a consumer standpoint -- individual traveler or corporate travel department -- there are few benefits to offset the negative impacts of this proposed merger that include reduced competition, higher fares and fees and diminished service to small and mid-size communities," one group, the Business Travel Coalition, wrote in a report released late Wednesday.

The BTC in arguing against the deal said it agrees that the U.S. airline industry needed to shrink from its early-2000s peak in order to be financially viable. "However, previous mergers have already enabled seat capacity cuts, higher fares and billions of dollars in fees for ancillary services resulting in a financially strengthening industry," the group wrote. "As such, consumer harms from this merger are indeed exacerbated, as there are no substantial countervailing consumer benefits."

Consumers and other deal foes figure to get plenty of opportunity to voice their opposition. Sen. Amy Klobuchar, D-Minn., chairwoman of the Senate Judiciary Subcommittee on Antitrust, in a statement said she planned to hold a hearing on the proposed merger "and examine its impact on competition and consumers." Other hearings are also likely.

The airlines counter that they only overlap on 12 of their 900 combined global routes, far fewer than past deals that won approval. Jamie Baker, airline analyst with JPMorgan Chase & Co., sounded a similar note, writing that this deal, unlikely previous mergers, should result in far fewer seats leaving the sky.

"Unlike prior mergers which were unequivocally predicated (in our minds) on hub rationalization and capacity cuts, [US Airways]-AMR is about restoring the AMR network to competitive parity with the networks of [Delta] and [United]," Baker wrote.

Industry sources have long maintained that while the government is likely to press for divestitures at space-constrained airports including Washington's Reagan National and perhaps New York's LaGuardia, regulators are unlikely to block the deal.