By Julie MacIntosh NEW YORK, May 24 (Reuters) - US Airways pilots on Friday said a request that they come up with $595 million in annual cost cuts was too high, but labor unions were prepared to negotiate with the struggling carrier so it can apply for crucial federal aid and potentially stave off bankruptcy. US Airways' (U) proposal that its pilots shoulder about half of its $1.2 billion in targeted cost reductions was not surprising, with the parties just pulling their chairs up to the bargaining table, said Roy Freundlich, a US Airways pilots' representative to the Air Line Pilots Association. "I've been around this process for a while," Freundlich said. "It is not all that uncommon that they overstate the initial request and then engage in a bargaining process." US airways' pilots union represents 4,800 active pilots, and a total of 5,900 pilots including those on furlough. A spokeswoman for US Airways' 10,000 unionized flight attendants said she could not yet specify the amount of concessions the carrier wants from the group. She said the airline's proposal had been discussed and a committee of negotiators for the flight attendants had been elected. Arlington, Virginia-based US Airways, the No. 6 U.S. air carrier, posted a $2.1 billion loss last year. It says it needs to improve profits by $1.9 billion each year for the next seven years to erase its earnings deficit. PREPPING FOR AN APPLICATION The airline's initial proposal calls for two-thirds of its profit improvement to come from workers, suppliers and lenders. It asked pilots to approve cuts in pensions, wages, productivity and other benefits over the seven-year period. US Airways, which needs to trim fat to make itself a better candidate for government-backed loan guarantees, expects stronger revenue to account for the remaining profit gains. It asked its workers for the authority to run more regional jets and seeks approval of a plan to enter into domestic and international code-sharing agreements with other airlines. Code-sharing deals allows carriers to expand their geographic presence by combining their route networks with those of other airlines. Passengers can book flights with one airline but travel on another for part of the route and can choose which airline's frequent flyer program to use. US Airways says it is in talks with all the major U.S. carriers except for Delta Air Lines (DAL), which has a route network that considerably overlaps US Airways' East Coast-focused network. Continental Airlines Chief Executive Gordon Bethune said on Thursday that Continental's ongoing talks with US Airways have been "fruitful," but said no alliance had been struck. US Airways spokesman David Castelveter said the airline hoped to have a code-sharing deal in place by the end of the year. BANKRUPTCY AS THE ALTERNATIVE US Airways continued to assert that if it cannot agree with its unions, suppliers and lenders on ways to restructure, its chances of getting the government to back up its credit as it applies for loans -- and accordingly, its chances of staying out of bankruptcy -- are slim. The carrier plans to ask for about $1 billion in federal loan guarantees ahead of the June 28 application deadline. But legislation coming up for vote in Congress could delay the availability of any funding until Oct. 1 and seriously jeopardize the financially unstable airline. US Airways was meeting with Machinists union representatives on Friday to outline the scope of its initial requests, and APLA's Freundlich said pilots' union representatives will be available to begin negotiating with the airline on Tuesday. Representatives from the airline and the unions have all said it is crucial that negotiations do not stretch on to the point where they jeopardize US Airways' ability to complete an application for the loan guarantees before the deadline. US Airways' stock was up 12 cents, or 3.76 percent, at $3.31 in afternoon trading on the New York Stock Exchange. ©2002 Reuters Limited.