US Airways pilots have agreed to pay cuts which will save the airline $465m (�303m) a year in an effort to keep the airline afloat.

The sixth largest airline in the US recently asked the government to back a $1bn loan to help it to stave off bankruptcy.

The Air Line Pilots Association's deal with the loss making airline, which extends until 2008, could help secure the government's backing.

US Air is seeking to save $1.3 billion in annual expense cuts from labour, suppliers, lenders and creditors.

Last year, the airline industry was hit by a sharp reduction in air travel following 11 September.

During the year, US Airways lost $2.1bn.

The airline's losses have extended into 2002 as air travel has failed to recover to last year's levels.