US Airways and America West Airlines are expected to announce their long-rumored merger today, revealing plans for a combined operation that would be large enough to surpass discount king Southwest Airlines as the nation's sixth-largest carrier.

The press conference is slated to be held in the Phoenix area, where America West keeps its headquarters and employs about 10,000.

The choice of Arizona for the announcement is perhaps a sign that headquarters for the combined company could move west, away from US Airways' home in Arlington, Va. America West is based in Tempe.

The announcement, while expected this afternoon, could also slide a day or two, according to US Airways Chairman David Bronner, who told Bloomberg News that the agreement may come at the end of this week or early next week.

The deal would cap weeks of speculation, months of negotiations and more than a year and a half of informal discussions. But it still faces challenges on a number of fronts, with the two companies needing the approval of shareholders, the federal government and a U.S. bankruptcy judge, plus the cooperation of employees to bring it about.

Several employees expressed concern about their futures at an America West shareholders meeting Tuesday in Tempe. But 43-year-old America West Chief Executive Officer Doug Parker, considered the likely candidate to run the combined carrier, warned that if a deal is reached, the fate of workers may not be known for a while.

Informal talks between the two airlines go back to late 2003, according to former US Airways executives.

US Airways was too small and too high-cost to survive long-term as a stand-alone carrier, they said, and executives decided to seek partners in order to survive any future consolidation within the industry. Then-Chief Executive Officer David Siegel also had conversations with United Airlines, with which US Airways had tried unsuccessfully to merge in 2001.

Before the talks with America West could get serious, US Airways needed to make more progress on reducing its industry-high costs. So it went back to its unions, which already had given up $1 billion during the company's first bankruptcy in 2002-2003.

It asked for and got another $1 billion in givebacks, again using the power of bankruptcy court to hammer home new contracts and shift the costs of employee pension plans to the federal Pension Benefit Guaranty Corp. US Airways modeled the new labor contracts after those at America West.

Once the talks with America West picked up, a key component became finding investors willing to prop up the two struggling carriers in an industry hammered by high oil prices, low fares and overcapacity. The industry is expected to lose $5 billion this year on top of more than $30 billion in red ink spilled since 2001.

Among the players reportedly willing to pledge money are aircraft manufacturer Airbus, Canadian carrier Air Canada, Boston equity fund PAR Capital Management, and commuter carrier Republic Airways, which promised as much as $235 million if US Airways is able to emerge from bankruptcy successfully.