Continental Airlines on Tuesday said it had requested a federal mediator to help it reach an agreement with flight attendants on pay and benefit reductions.

Continental is in talks with its flight attendants on wage and benefit concessions that would allow it to reach a goal of USD$500 million in cost savings.

"Bringing in a federal mediator is the next step in the process of reaching an agreement that's fair to the company, fair to the flight attendants and fair to all co-workers," said Larry Kellner, Continental chief executive.

"It's important that our flight attendants join the rest of our co-workers in participating in pay and benefit reductions."

Under the Railway Labor Act, either party may apply for mediation when an agreement is not reached through direct negotiations, the airline said.

Continental's flight attendants are represented by the International Association of Machinists.

"It's not unusual for a federal mediator to be assigned to a difficult negotiation such as this," IAM spokesman Frank Larkin said. "We're prepared to work with the mediator to achieve an agreement that's fair for our members."

Larkin declined to say whether the IAM agrees that mediation is needed.

The flight attendants earlier this year were the sole labor group to reject new contracts the airline said it needed to avoid a cash crunch.

Continental, along with the rest of the airline industry, has been battered by soaring fuel costs, weak revenue and low-fare competition.