According to Reuters, US Airways has made a formal merger proposal to American Airlines parent AMR Corp and its creditors that could value the combined airline at around $8.5 billion. Reuters quotes two sources close to the negotiations.

Details of the merger proposal emerged as American Airlines pilots voted to ratify a new union contract on Friday.

The new labor contract, approved by nearly three-quarters of the AMR pilots who voted, gives the Allied Pilots' Association a 13.5 percent equity stake in AMR.