US Airways has set out a plan to seek about $1bn of federal government aid to stave off bankruptcy.

The airline is also sounding out competitors about alliances to help boost revenue and convince a loan guarantee board it has a route back to profit, its chief executive David Siegel told the Wall Street Journal.

US Airways is asking its staff and suppliers to accept about $1.2bn of cost cuts, about 80% of which will come from staff pay and benefits, US Airways senior vice president for employee relations Jerry Glass has said.

US Airways is only the second American airline to ask for federal aid from a fund set up after the 11 September attacks, initiating negotiations which could last several months.

Mr Glass, who outlined the survival to staff representatives on Thursday, has promised that no more job losses being planned.

Supportive staff

US Airways, which ranks sixth in size among American airlines, shed 11,000 jobs after the 11 September suicide hijackings threw the aviation industry into turmoil and drastically reduced passenger numbers.

The cost cuts would take US Airways' staff from the best paid in the industry down to about sixth or seventh, Mr Glass acknowledged.

But they may be willing to accept the austerity plan.

"We're committed to helping this airline survive," said Karen Lascoli, who represents US Airways cabin crew who are members of the Association of Flight Attendants.

"We're not sure exactly what'll be asked of us, so we have to be careful to committing to anything."

Long-term problems

The airline ranks sixth in size among US carriers and relies heavily on the North American domestic market.

It posted losses of $2.1bn in the 12 months to March 2002 and is widely seen as in need restructuring.

Merrill Lynch analyst Michael Linenberg said last September that "US Airways must be operationally restructured, otherwise its profitability will never be restored."

Failed merger

The airline's woes go back well before the 11 September assaults on the World Trade Center and the Pentagon.

In July 2001, its attempted $4.3bn merger with larger rival United Airlines failed to clear anti-trust hurdles, forcing US Airways to reposition itself as a regional carrier shortly afterwards.

At that time, it warned its losses would continue because it had too many empty seats. To solve the problem, the new strategy included a switch to smaller planes.

Now it wants to intensify the move towards smaller planes by adding 150 regional jets.

US Airways cut capacity by 23% after 11 September.

Alliance talks

Its chief executive has declined to name the airlines it is talking to about potential alliances. The discussions were at any early stage and "very fluid," he said.

He did, however, rule out Delta Air Lines because it shares US Airways strength on the US East Coast so a tie-up would bring little benefit.

Industry analysts say a passenger transfer deal, or code-share, with North West or Continental, which are strong in the Midwest and West Coast, would expand US Airways reach.

Joining forces with United could bring it into the international Star Alliance of 14 code-sharing carriers.

The only precedent for a request for federal aid from the Air Transport Stabilisation Board (ATSB) was provided by America West Airlines, which received $380m in loan support.