Pilots offer pay cuts as gloom hits airlines

Pilots at American Airlines, the world's largest carrier, offered a £660m (£410m) package of pay cuts yesterday in an effort to avert bankruptcy.

A union representing 13,500 pilots said it was prepared to sign up to changes in working conditions and to across-the-board pay-rate reductions. American would be the latest victim of an industry crisis triggered by the war with Iraq, surging oil prices and slumping share prices.

The proposal from the pilots' union follows tentative deals offered by other unions. The 26,000-strong flight attendants' union offered $340m of concessions on Friday which the union says meets management's cost-savings targets. A pact still must be reached with 16,200 mechanics represented by the Transport Workers Union, which warned that bankruptcy would lead to a further $500m of cuts. On Saturday, the TWU said it had reached tentative deals for five of its eight working groups.

The airline has said it needs to cut costs by about $4bn a year to avoid bankruptcy. It wants its unions to accept $1.8bn in wage concessions. It could still file for bankruptcy – the largest in aviation history – as soon as next week, according to sources. United Airlines is already in bankruptcy and all major US carriers have implemented savage cuts.

Meanwhile, US Airways is poised to exit Chapter 11 today, becoming the first major US carrier to make it through the bankruptcy process since 11 September.

The Virginia-based airline entered bankruptcy as the sixth-biggest US carrier and will exit as the seventh biggest, with plans to deploy more regional jets, a greater focus on the East Coast, and $1.9bn of annual cost savings. The bankruptcy process will have taken fewer than eight months.

US Airways' parent company US Airways Group, cleared its last major hurdles to exiting Chapter 11 on Friday when the government's Pension Benefit Guaranty Corporation and Judge Stephen Mitchell of the US Bankruptcy Court in Virginia approved a plan to terminate the company's pilot pension plan and replace it with a cheaper one.