Washington, Feb 14 : A merger between two American airlines is set to create the world's biggest airline, according to a source.

The source said that under the deal between American Airlines and US Airways (LCC), the combined airline, which has been touted as the world's biggest airline, would have a valuation of approximately 10 billion dollars and would bear the name of American Airlines, CBS News reports.

The source added that US Air CEO Doug Parker is expected to lead the combined company. According to analysts, merging airlines often reduce capacity, eliminate routes and raise the travel fares which are a result of the reduced competition.

However, some analysts viewed the consolidation trend, blamed mainly on rising fuel prices, with optimism as many combined US carriers offer low-cost flights and no-frills service. American Airlines has been operating under court supervision since declaring bankruptcy in November 2011. (ANI)