According to US Airways, the combined carrier would retain the Delta name and become the largest airline across the Atlantic and the second largest to the Caribbean.

In his proposal to his counterpart at Delta, US Airways' CEO W. Douglas Parker said, "The 'New' Delta would reach more than 350 destinations across five continents, including North and South America, Europe, Asia and Africa. In the US, the combination would create a leading competitor in the Eastern US and an enhanced position in the Western US.

"The combined company would be the number one airline at 155 airports. The New Delta would also be uniquely positioned to compete with low cost and legacy carriers."

US Airways has offered $4 billion in cash and 78.5 million of its own shares with an aggregate value of around $4 billion, based on yesterday's closing prices.

It said its proposal represented a 25 per cent premium over the current trading price of Delta's pre petition unsecured claims as of November 14, assuming $16 billion of unsecured claims to be settled.

This implies that creditors would receive 50 per cent of their dues from the beleaguered airline, a 25-per cent improvement over the trading price of its unsecured debt of 40¢ per dollar.

US Airways has also said that a merger with Delta could produce annual cost savings of $1.65 billion, part of which would come from a 10 per cent reduction of the two airlines' capacities and combining facilities at airports that both airlines fly.

Aviation sector analysts have consistently maintained that the US airline industry suffers from overcapacity, due to which several of the largest carriers have been forced to seek bankruptcy protection in recent years.

Since 7 /11, while large carriers have lost money, the low fare airlines have seen their profits increase.

Coincidentally Northwest Airlines had ought bankruptcy protection in September on the same day as Delta. In the past US Airways has filed for bankruptcy protection twice, merging with America West in September 2005, when it came out of the second bankruptcy protection.

US Airways has committed financing from Citigroup for the proposed transaction for $7.2 billion, representing $4.0 billion to fund the cash portion of the offer and $3.2 billion in refinancing at both companies.