Washington's hometown airlines, US Airways and Atlantic Coast Airlines, are revving their engines for the Battle of Washington, a discount-fare dogfight only one of them may survive.

In two weeks Atlantic Coast begins flights as Independence Air, a low-fare airline that plans to fly 300 flights a day out of Dulles International Airport. US Airways primarily flies out of Reagan National Airport, but Independence's low fares could lure some US Airways passengers to Dulles for flights to the same cities.

Atlantic Coast executives are betting the business on a radical transformation from a contract carrier flying feeder flights for bigger airlines into a low-cost, brand-name airline, Washington's own version of Southwest or JetBlue.

US Airways is staking its future on an even more difficult reinvention, from a traditional airline with a costly nationwide system of hubs and planes to a lean, mean flying machine.

The stocks of the two have become all-or-nothing bets, potentially valuable if the plans work, probably worthless if they fail. The two stocks are also an either-or bet because it's hard to envision a scenario in which both airlines succeed.

If Independence attracts the Dulles passengers it hopes for, a lot of them will come from US Airways. There is a 90 percent overlap between Independence Air's flights from Dulles and cities served by US Airways from the three Washington area airports.

And while Independence Air is trying to lure away US Airways passengers in Washington, Southwest Airlines is adding dozens of new flights out of Philadelphia, US Airways' busiest market.

"Southwest in Philadelphia and Independence at Washington Dulles are the two nails in the coffin for US Airways. They are why I don't think it survives," said Michael Miller of Velocity Group, a Northern Virginia aviation consulting firm, which has worked for Independence Air.

A Velocity study said Dulles is ripe for a low-fare carrier because almost all the bargain flights in the Washington region are out of Baltimore-Washington International Airport. Independence will be able take customers from full-fare carriers at Dulles and Reagan National and from discounter Southwest at BWI, Miller said.

On the other hand, BB&T Capital Markets recently cautioned that Atlantic Coast's transformation into Independence Air has "a higher probability of failure than success."

Airline industry analysts are leery of both stocks.

Before 9/11 devalued the entire airline industry, Atlantic Coast stock was trading in the $25- to $30-a-share range. Lately it's been $5 to $6, closing Friday at $5.63.

US Airways came out of bankruptcy protection in August, and creditors got shares of the company. Initially trading for as much as $32 a share, the stock soon slipped into the single digits. Then as creditors cashed in their holdings it drifted down to $1.49 a share a couple of weeks ago.

But defying logic -- and the recommendations of analysts -- the stock had climbed back to $2.61 by Friday.

The rebound came after US Airways chief executive Bruce R. Lakefield told shareholders that even after reorganizing in bankruptcy, the airline still must cut labor costs by $800 million more to survive.

If the airline can persuade employee unions to accept more pay cuts and work-rule changes, US Airways can become profitable, he said.

If it cannot, it's back to bankruptcy court for the second time in less than a year, he said. Delta Airlines, also regarded by analysts as a candidate for Chapter 11, on Friday revealed that it had hired a bankruptcy consultant.

Lakefield put the best possible spin on the situation at US Airways' annual meeting, saying a "partnership" between the company and workers can save jobs and save the airline.

Though the flight attendants' union immediately rejected more givebacks, some investors decided the call for cost-cutting was such good news that they rushed out to buy US Airways stock. In four days of hectic trading, its price more than doubled, from $1.46 to $3.30 a share, before the buyers started taking profits.

"I wouldn't put a lot of credibility in that," said analyst Raymond Neidl of Blaylock & Partners, a New York investment and research firm. In a recent research report, he said that even if US Airways "should succeed in obtaining the required employee cost cuts, we are not sure that they will be enough to save the airline." Without more givebacks by workers, the question is not if the company can avoid bankruptcy but how soon it will be forced into it, Neidl said.

The buyers certainly weren't following Blalock's recommendation. Neidl and fellow analyst Thomas Curran recently cautioned clients to "avoid all securities" issued by US Airways. Not only is the stock too risky to buy, they said, so also are the company's bonds -- even though they would probably retain some of their value after a bankruptcy.

Only one other analyst follows the stock, rating it "hold."

Analysts are only slightly more enthusiastic about Atlantic Coast shares. Six of the eight investment firms that follow the stock rate it "sell," the other two "hold."

Independence Air is already taking reservations at its Web site (www.FLYi.com) and soon will change its corporate name from Atlantic Coast to FLYi and switch its Nasdaq stock-trading symbol from ACAI to FLYI.

Atlantic Coast concedes that what it is trying to do has never been done before. But, said spokesman Rick DeLisi, Independence Air will take off rapidly and by the end of the summer will run 300 flights a day out of Dulles, serving 35 cities. Some of those are cities previously served by Atlantic Coast with United Express flights; others are new markets where Independence will compete with "legacy airlines" such as US Airways, United and Delta.

Luring customers away from full-fare tickets ought to be easier that taking them away from discounters like Southwest. But Independence also is counting on customers who now go to BWI for bargain fares on Southwest to try its flights out of Dulles, which is more convenient for many residents of the Washington region.

DeLisi said Independence Air projects that it can be profitable within a year after it begins flying.

US Airways, doesn't have that long, Neidl said. The deadline for securing the cost cuts needed to avoid bankruptcy is probably July 4, he said, giving US Airways executives only a month to form their "partnership" with the unions.

US Airways says it has more breathing room than that, but hopes to cut more costs quickly. In the meantime, it is slashing fares out of Dulles and Philadelphia to meet its new competition.

While US Airways meets with the unions, Atlantic Coast tomorrow begins shutting down some of its United Express routes, pulling planes out of service to give them new interiors and Independence Air paint jobs.

Jerry Knight's e-mail address is knightj@washpost.com.