A merger between US Airways and American Airlines has moved a step nearer after gaining the approval of the US Justice department.

The prospect of creating the world’s largest airline had drawn criticism from the government and six states who joined a law suit to block the merger, saying that it would restrict competition and put up prices.

However Tuesday’s settlement requires the new airline to give up take-off and landing rights to low-cost carriers at major US airports.

Analysts claim the new company will change the landscape of the US airline industry.

US Airways eight-billion-euro acquisition of American – which has just emerged from bankruptcy – has been on the cards since Delta, Northwest and Continental became one.

This latest merger is expected to be completed in December.