NEW YORK, May 9 (Reuters) - Alaska Air Group on Monday said an arbitrator`s decision on a new contract with the airline`s pilots will save it as much as $90 million a year, while also cutting its pension costs.

Arbitrator Richard Kasher made his decision on April 30, but the parent of Alaska Airlines only disclosed the details in a filing with federal regulators on Monday.

The company said the decision, which covers all its 1,465 pilots, will save it $80 million to $90 million a year.

About $60 million of those savings will stem from lower wages, about $10 million from work rule changes, and about $4 million from cuts in medical benefits and payroll taxes.

The lower wages will also cut pension costs by $5.5 million to $14 million year.

Most of the changes will be ``realized immediately,`` the carrier said.

Alaska Air began mid-term negotiations with its union leaders in October 2003, but failing to reach an agreement, the issues were given to an arbitrator in December.

05/09/05 14:34 ET