By Kathy Fieweger CHICAGO, July 9 (Reuters) - The pilots' union at US Airways tentatively agreed to a roughly 26-percent pay cut to help the struggling carrier survive but said the key issues of job security and equity compensation still need to be resolved. While talks continued outside Washington on Tuesday, news of the tentative deal pushed the stock of No. 6 airline US Airways Group Inc. (U) higher on the New York Stock Exchange. They closed up nearly 7 percent or 23 cents to $3.52 despite the airline's continued warning it could file for bankruptcy. "We're looking for equity participation," Air Line Pilots Association spokesman Roy Freundlich told Reuters, adding the sides needed to work out how much stock or options and performance-based raises the pilots get for their sacrifices. The US Airways pilots' master executive council tentatively agreed late on Monday to give up $465 million per year in wage cuts and other concessions for six and a half years to help the Arlington, Virginia-based airline recover from a post-Sept. 11 fall in demand. The deal was about 85 percent of the latest request from management, which is targeting $950 million a year in overall labor costs. It also struck a tentative $77 million-a-year deal last week with its flight attendants' union. US Airways has posted record losses in the wake of the Sept. 11 attacks involving commercial jetliners. It lost a net $2.1 billion in 2001 and $269 million in the first quarter. US Airways currently has about 36,000 employees, after laying off roughly 11,000 after Sept. 11, including staff at its MetroJet subsidiary, which is no longer airborne. About 4,400 pilots are on active duty, flying a fleet of 311 jets. DEAR UNCLE SAM With the industry struggling because of many Americans' reluctance to fly after Sept. 11, the airline has asked the federal government -- through the Air Transportation Stabilization Board -- to back $900 million of a $1 billion loan. The Washington Post on Tuesday reported the airline will consider giving up equity in return as smaller America West Holdings (AWA) did for its $380 million in loan guarantees. The biggest airline to ask the government to back up private sector loans is UAL Corp.'s (UAL) United Airlines, seeking backing for $1.8 billion of a $2.0 billion loan. So far, United, which has reached agreement with its pilots over a 10-percent pay cut, has said it does not believe it will have to offer equity to the government. US Airways spokesman David Castelveter declined to comment on any part of the loan guarantee application including the potential for giving up equity. He said the airline is making progress with other union groups in negotiating cost cuts needed to give the application credibility. "We're making great progress with the pilots," he said. "We are making progress as well with our other unions." Still, he said a bankruptcy filing still could not be ruled out. Besides ALPA and the Association of Flight Attendants, US Airways' unions include the International Association of Machinists and Aerospace Workers, the Communications Workers of America and the Transport Workers Union. The US Airways IAM branch said on a Web site (www.machinists1725.org) that meetings were scheduled with management this week to discuss the restructuring plan after proposals were exchanged July 3. IAM spokesman Joe Tiberi said IAM negotiators were meeting on Tuesday and while talks were progressing, job security and other issues remained. Late on Tuesday, a deal with a small group of simulator engineers represented by the TWU was also reached. RATE REDUX Freundlich said rates for a narrowbody captain would drop to about $160 per hour from $185 and those for a first officer to $110 per hour from $129. As part of their 1998 contract agreement, US Airways pilots received raises based on "parity reviews" that measured pay at rival carriers. In 2001, pilots got 17 percent raises and in 2002, a 16 percent increase. After adjusting for interest rates, "basically, we're giving back to the company those pay raises," Freundlich said. The airline recently defaulted on payments for some of its older airplanes and on some public debt securities, a move analysts said could result in a wave of additional defaults and an eventual bankruptcy. But US Airways' creditors might opt not to call its defaults if they feel its push to slash labor costs has progressed, analysts said. The carrier reached a tentative deal with its flight attendants' union last week that would offer up $77 million a year in cost savings over the next six years. ©2002 Reuters Limited. RELATED QUOTES Symbol Last Trade Change U 3.63 +0.11 AWA 2.31 -0.18 UAL 8.75 -0.18 Enter one or more symbols Quotes delayed up to 20 minutes. Click here to email this page to a friend