By Julie MacIntosh NEW YORK, June 11 (Reuters) - US Airways forged ahead in talks with its unions on Tuesday after applying for a $900 million federal loan guarantee, as pressure intensified for the airline to slash labor costs to strengthen the chances of the application being approved. Arlington, Virginia-based US Airways Group Inc., (U) which saw its business nosedive after the Sept. 11 attacks, says its ability to stave off bankruptcy depends on persuading its employees and suppliers to cut as much as $1.3 billion in costs each year. Steep cost reductions at US Airways are seen as vital to the success of its petition for loan guarantees, which were set up as part of a $10 billion government program after Sept. 11 to rescue airlines that desperately needed cash and could prove that their business plans were sound. US Airways filed a completed application on Monday evening with the Air Transportation Stabilization Board (ATSB). Now that the initial petition is in, ongoing dialogue will start up between the ATSB and the air carrier, Treasury spokeswoman Betsy Holahan said. "If there are any concerns that arise, those will be communicated to the air carrier, and the air carrier usually takes steps to address those," Holahan said. US Airways and the U.S. Treasury Department both declined to make the application available. The deadline for filing an initial application for loan guarantees is June 28, "In an effort to prove its viability, US Airways will be finalizing details of its proposal with the ATSB over the coming days," Credit Suisse First Boston analyst James Higgins said in a research note. "We expect much more detail with the finalized plan." America West Holdings' (AWA) America West Airlines, the only other air carrier to win federal backing of its loans, revised its application several times as the government demanded that it cut down on labor costs and surrender warrants for up to a third of the company before receiving aid. The ATSB granted America West $380 million in loan guarantees, after the carrier negotiated with its labor unions and vendors for more than $600 million in concessions. QUICK-DRAW NEGOTIATIONS US Airways, the nation's sixth-largest air carrier, took a huge financial blow after the Sept. 11 attacks, as traffic dropped off on many of its East Coast-concentrated routes and the temporary closure of Washington D.C.'s Reagan National Airport stalled its operations there. The carrier reported a $2.1 billion loss last year and posted a $269 million shortfall in the first quarter. US Airways asked for $950 million in cost reductions from labor, and asked pilots to shoulder $595 million of the cuts. The Air Line Pilots Association (ALPA), which represents nearly 6,000 active and furloughed US Airways pilots, first responded with an offer for $328 million in annual pay cuts, but came back on Saturday with another proposal offering about $400 million a year, union spokesman Roy Freundlich said. US Airways' decision to file its loan guarantee application before signing deals its unions on wages and other concessions has no bearing on pilots' negotiations, Freundlich said. "We are supporting management's efforts to get an ATSB loan guarantee," he said. "There is progress being made. The negotiating atmosphere seems conducive to resolving all the issues, it's a matter of everything falling into place." The Communications Workers of America, which represents about 8,300 of the airline's active passenger service workers, continued to battle against what it said was an unrealistic target for salary reductions. The union said on its Web site that it offered to roll back some salary increases, forgo parity raises next year, and agree to changes in employee medical plans, but it said it didn't feel its members would vote for the sacrifices unless the airline was on the "verge of bankruptcy." The CWA and US Airways agreed to meet with again on Wednesday, but the CWA said "It doesn't look very promising." US Airways' flight attendants' union has proposed about $50 million in cost reductions in response to the carrier's request for $90 million, and said it would put together another proposal on Tuesday that would offer more concessions. Still, the International Association of Machinists, which represents about 12,000 US Airways workers, last week said they had yet to see a "legitimate" proposal. US Airways asked its machinists and fleet service workers for $261 million in cuts. Shares of US Airways bounced 26 cents higher, up more than 8 percent, to $3.36 on Tuesday. ©2002 Reuters Limited.