ARLINGTON, Viriginia (Bloomberg) ? US Airways Group Inc., the seventh- largest US airline, may seek bankruptcy protection for the second time in two years unless costs are reduced to compete with low-fare carriers.

US Airways will consider "asset sales or a judicial restructuring" if it can't meet the lower costs of JetBlue Airways Corp. and America West Holdings Corp., the airline said in a quarterly filing with the US Securities and Exchange Commission.

The Arlington, Virginia-based airline is trying to stem losses as Southwest Airlines Co. began flights yesterday from Philadelphia, the biggest US Airways market. US Airways this week is briefing employees on plan to seek additional pay and benefit concessions in the next few months.

US Airways last month posted a $177 million first-quarter loss on $1.7 billion in sales. The airline posted losses in the fourth and third quarters last year after exiting from an August, 2002 Chapter 11 filing in April 2003.

The airline's credit rating was downgraded on Wednesday one level by Standard & Poor's Ratings Services, casting doubt on the airline's financing from General Electric Co. for new smaller jets that would help reduce costs. The two companies are in discussions about revising the agreement.

US Airways has agreed to add $40 million to an American Express Travel Related Services reserve fund if tickets sold for its flights aren't used. The companies agreed to "additional cash collateral" on Tuesday in an amendment to an existing agreement, according to the quarterly filing.

"When you ask for cash collateral, it's pretty obvious that you think your risk has increased," said Moody's analyst Richard Bittenbender.

US Airways and American Express declined to comment on the agreement. American Express Travel Related Services, the largest US corporate travel agency, is a unit of New York-based American Express Co. US Airways may have to add as much as $75 million if it fails to meet other financial requirements.

The new agreement provides "additional cash collateral to reduce the exposure borne by American Express against potential customer liabilities relating to unflown tickets purchases by our customers using the American Express card," US Airways said in the filing.