The US Airways Group Inc. announced on Wednesday that it had entered into a $1.9 billion deal with its rival Southwest Airlines Inc. to acquire the latter’s full fleet of planes and other assets.
The deal is expected to close in the third quarter.
Southwest has also said it is exploring other options to increase its capacity to handle more frequent domestic flights and boost revenue.
In addition, the company is in talks with several other airlines to buy aircraft, according to people familiar with the matter.
The new airline has about 7,000 aircraft in service.
The airline has been facing a slowdown in its business amid rising competition and cost pressures from China and the United States, which both have expanded their domestic air travel.
Southwest’s board of directors voted to approve the deal in May.
The company’s stock has risen nearly 20% this year and is up about 70% in the past year.
The US airline is a unit of Delta Air Lines Inc., which has an 85% market share.
In a separate deal, United Airlines Group Inc., an affiliate of Delta, also announced plans to acquire Southwest and is also exploring options to expand its domestic fleet, according a person familiar with those discussions.
US Airways has been seeking to boost its domestic revenue by about $200 million this year to $7.7 billion, according the person.
The companies are scheduled to meet in September for a closed-door meeting in Washington.