American Airlines and US Airways will merge and create the world's biggest airline.

The boards of both companies approved the merger late on Wednesday, according to three people close to the situation.

The carrier keeps the American Airlines name, but will be run by US Airways chief executive Doug Parker. American's CEO, Tom Horton, will become chairman of the new company, these people said.

A formal announcement is expected on Thursday morning.

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.