Delta Air Lines and Northwest Airlines have reached a merger agreement to create the world’s largest carrier, reviving expectations that the combination will touch off a wave of consolidation within the US aviation industry beset by record fuel costs and waning demand.

The accord, reached late on Monday after the two companies’ boards met separately, capped several months of negotiations that nearly ended following an impasse between the carriers’ pilots. Driven by fuel, restless investors and a looming slump in demand for air travel, Delta and Northwest returned to the talks earlier this month.