By John Crawley

ALEXANDRIA, Va. (Reuters) - US Airways Group Inc. (Nasdaq:UAIR - news), trying to raise money and avoid liquidation, on Monday asked a judge for permission to skip a big pension payment due this week, in its first move since filing for protection against creditors over the weekend.

The No. 7 U.S. airline, which filed for its second bankruptcy in as many years on Sunday, got permission to continue operating using money from a loan it secured last year with the help of government guarantees.

But US Airways told the court it cannot make the $110 million payment due Wednesday for pension plans covering members of the International Association of Machinists and the Association of Flight Attendants, and that it may ask to terminate those plans.

"The debtors currently believe that they would not be able to meet their obligations under the pension plans and survive," the company said in court documents.

Its stock fell by a third in afternoon trading.

US Airways aims to slash its costs in a bid to become more like the discount airlines that threaten its survival.

US Airways has said it must cut costs by $1.5 billion -- $800 million of which it hopes to get from labor unions that yielded nearly $2 billion to help the company out of its first bankruptcy.

"We're still talking, we talk every day, we're still working very hard," Chief Executive Bruce Lakefield told reporters outside court about so-far-unsuccessful efforts to win givebacks from the airline's unions.

Lakefield did not rule out the possibility that labor contracts could be rescinded if the talks fail but the court would have to agree.

US Airways is arguing its case before the same judge, Stephen Mitchell, who approved its initial restructuring in March 2003.

The company told Mitchell it also cannot pay $19 million it owes to its pilots' retirement plan. The previous plan for pilots was terminated during the company's first bankruptcy and replaced with a cheaper plan.

US Airways said it wants to negotiate changes to its defined benefit plans with mechanics and flight attendants but could also terminate them.

"We will start putting all the issues on the table, all these things are possible as the (bankruptcy) case proceeds," Chris Chiames, senior vice president of corporate affairs, said outside the court.

Soaring fuel costs and weak sales amid competition from low-cost rivals like Southwest Airlines (NYSE:LUV - news) are at the root of US Airways' problems.

US Airways was the first big U.S. carrier to enter bankruptcy during the industry's worst downturn, accelerated by the Sept. 11, 2001, hijack attacks. It filed its first bankruptcy in August 2002, followed months later by No. 2 United Airlines, which is still in Chapter 11.

Delta Air Lines (NYSE:DAL - news), the No. 3 U.S. carrier, is fighting to avert a filing.

US Airways' second bankruptcy petition said it now expected 2004 fuel costs to be $300 million higher than previously thought, while mainline passenger revenues would be $450 million lower.

It listed assets of about $8.8 billion and liabilities of $8.7 billion. It has about $1.45 billion in cash.

Some industry experts say the company should be able to leverage the bankruptcy law to cut its way to health.

"They have an enormous ability to use the judge to impose settlements with the unions," said Darryl Jenkins, director of the aviation institute at George Washington University.

Bill Pollock, chairman of the US Airways chapter of the Air Line Pilots Association (news - web sites), said the union was disappointed the airline chose bankruptcy but expects talks to continue.

Perry Hayes, president of the US Airways unit of the Association of Flight Attendants, said "flight attendants want US Airways to survive but not at the cost of their own survival."

Pension fund Retirement Systems of Alabama owns 36 percent of US Airways, while the pilots' union holds a 19 percent stake. The U.S. government, which granted a $900 million loan guarantee during the first restructuring, holds 10 percent. General Electric Co., a supplier of regional jet financing, owns 5 percent.

US Airways shares fell 44 cents to $1.02 in trading on the Nasdaq.

(Additional reporting by Jeremy Pelofsky)