American Airlines and US Airways have announced plans to merge creating the world’s largest carrier valued at some $11bn (£7.08bn).

In a message to colleagues at both airlines, American’s chairman and chief executive Tom Horton said: “This new American Airlines will combine the best of both companies to create the most value for our owners and great promise for our customers, partners and people.”

The merged airline will be part of the oneworld alliance, and has said it remains fully committed to its joint business agreements with BA and Iberia, Japan Airlines and Qantas. “The new combined American Airlines will be a stronger airline with a broader route network bringing even greater benefits to the joint business relationships,” said Horton.

BA’s parent company IAG has welcomed the move. In a statement it said: “We wish American Airlines and US Airways every success as they move forward with their merger plans.

“AA is a key strategic partner for IAG and it has done a great job to restructure its business and establish the prospect of a bright and profitable future in tandem with US Airways.

“We would like to pay tribute to the work that Tom Horton and Doug Parker have done to bring about this merger and look forward to working with them in their new roles.

“Our relationship with the new airline will remain strong as we work together to enhance our transatlantic joint business and the oneworld alliance.”

The merger will see the iconic American Airlines branding preserved.