Continental put up its ticket prices in May

Wage cuts could follow if the company does not improve its finances, said the US' fifth-largest carrier.

Continued losses are "jeopardising the survival of the airline," said the chairman and chief executive Gordon Bethune in a statement.

The job cuts, with earlier reductions in staff, mean the airline has cut its workforce by 24% since September 2001.

Earlier on Thursday, Continental Airlines and its pilots' union signed an agreement pledging to work together to help secure the airline's future.

Under the deal, the US airline will open its books to the union, in exchange for the pilots making reasonable demands that will not harm its finances.

It comes as US carriers continue to struggle against high fuel costs and security concerns since the 11 September 2001 attacks.

US Airways said it was also looking to secure such a deal with its unions.

Industry-wide interest

Both airlines have been struggling financially in recent times, with Continental reporting a half-year loss of $17m (�9m) in July, and US Airways hoping to make $1.5bn worth of cost cuts to avoid a second bankruptcy filing.

"Everyone knows the situation (for airlines) is dire," said Mr Bethune.

"There are two ways to approach it - we can do it acrimoniously as opponents, or we can join together as friends and team-mates and handle things on an objective basis."

Duane Woerth, president of the national Air Line Pilots' Association, said the rest of the airline industry in the US would now be looking at Continental's union partnership to see if it works, both in terms of labour relations and financial viability.

"They are not going to leap to this, they're going to sit back and see if this produces a different kind of way to get things done," said Mr Woerth.

If it works, "this could be a model for the industry", he added.

US Airlines has made a similar agreement proposal to its union, which is now looking at the details.

The company says it needs to secure $800m of concessions from its workers as part of a package of $1.5bn cost cuts.