Continental ( CAL) is warning of a liquidity crisis if it can't meet a key labor savings goal.

In a filing with the Securities and Exchange Commission, the airline said: "Failure to achieve $500 million in annual wage and benefit cost reductions by Feb. 28, 2005 could ultimately result in the company having inadequate liquidity to meet its obligations."

The airline's stock fell 71 cents, or 6.3%, at $10.50.

In November, Continental said it was seeking the savings in order to have a chance at returning to profitability in a dire environment for airlines. At the time, the airline said about half the savings would come from productivity and benefit changes, and the other half from wage cuts. Top executives have agreed to salary reductions of 20% to 25% beginning Feb. 28.

Continental was the last of the traditional U.S. network airlines to seek companywide pay cuts in the wake of the Sept. 11, 2001, terrorist attacks.

Airlines' unit revenue is under pressure from fierce price competition and overcapacity. Fuel costs remain burdensome despite recent declines in the price of oil.

This week, Delta Air Lines ( DAL) stunned rivals with a plan to slash fares as much as 50% on U.S. flights and to simplify pricing. Analysts said the move -- if mimicked by rivals -- is likely to hurt industry revenue even more when carriers can ill afford it.

In the SEC filing, Continental said if it can't achieve its labor savings goal it likely will lose hundreds of millions of dollars this year. The company also has about $984 million in debt and pension payments coming due in 2005 -- about $500 million more than in 2004.

"Without the reduction in wage and benefits costs and a reasonable prospect of future profitability, we believe that our ability to raise additional money through financings would be uncertain," the filing said. "Moreover, unless we are able to timely achieve the reductions, we believe that we will not receive approval from our board of directors to take delivery of additional aircraft that we recently announced."

A Continental spokesman did not return a phone call seeking comment on the status of the company's negotiations with various labor groups.