Still weak despite more than $1 billion in new employee concessions, US Airways told labor leaders this week it now has three options: stay the course, downsize or pursue a partnership with another airline, such as America West Airlines.

Providing insight into its merger strategy for the first time, US Airways said such a deal had the potential to widen its scope and scale while preserving jobs and creating a large, national low-cost carrier. But such a combination also faces "many hurdles to success," according to a copy of the presentation obtained by the Post-Gazette.

US Airways, in bankruptcy for the second time in two years and coming off a first-quarter loss of $282 million, confirmed last month that it was in talks with Tempe, Ariz.-based America West about a "strategic transaction." But in its slide-presentation to labor leaders on Wednesday, it did not refer to America West by name.

Instead, US Airways referred to a list of requirements for a deal with "the right partner." The Arlington, Va.-based carrier wants to "get fair value," put in place an "orderly transition" and realize "significant" savings from the combination, according to a copy of the presentation.

The two airlines have been silent about the talks since confirming them last month.

A deadline for US Airways to file a plan of reorganization with the bankruptcy court came and went last Friday, and the airline has said it continued to talk to aircraft creditor General Electric, which imposed the deadline, about the "timing" for a filing.

Some analysts believe that the filing of a plan will coincide with a resolution of the US Airways-America West discussions.

As for other alternatives, US Airways told labor officials it was still considering an option called "stay the course," which would require changes in ticket prices and fuel costs. Soaring fuel costs have led many airlines to try to raise fares, but while they are up somewhat, they haven't risen enough to offset fuel's impact.

It also is weighing more "downsizing," according to the presentation.

The airline did not elaborate on this option, other than to say that it would "enhance short-term profitability" while creating "significant transition issues."

The downsizing could refer to a smaller fleet size. US Airways said this week that it would be paring 10 planes from its fleet, leaving it with 253 by August, but without any furloughs.

Local airline analyst Bill Lauer said US Airways could cut its fleet further, which could result in more job losses.

US Airways, which declined comment for this story, is looking to all areas in its quest to cut costs.

It has identified $159 million in nonlabor cost savings for 2005, according to Wednesday's presentation. Of that total, $81 million has been put in place already and the rest would come later. The savings include everything from vendor contracts to corporate real estate to insurance premium renegotiations to food and passenger materials.

US Airways also outlined the ways in which it can save more money from 2006 through 2011. The savings range from $82.4 million in 2006 to $91 million in 2011 and include closing facilities, changes in technology and expansion of its "buy-on-board" program, where passengers currently pay for meals.