AT&T Inc. (NYSE: T) and union officials representing about 40,000 U.S. workers have extended contract talks after the two sides failed to reach an agreement ahead of their deadline.

The telecom giant escaped a walkout by members of the Communications Workers of America, who will continue to work while negotiations continue. The contracts cover employees in the eastern, midwestern and western regions of the United States -- specifically Illinois, Indiana, Michigan, Ohio, Wisconsin and Connecticut, as well as a smattering of 6,000 employees across the country.

Though negotiations continue, both sides remain far apart on a deal. CWA launched a website chronicling the negotiations and has mentioned few notable signs of progress.

We are committed to continuing to work together with the union to bargain a contact, a spokesman for AT&T told the Wall Street Journal.

The Dallas-based company is seeking cuts in pensions along with increased health insurance premiums and co-payments to offset revenue declines from losses in fixed-line customers, as consumers ditch landlines for mobile phones.

The company's landline phone service division saw operating income fall 7.2 percent in 2011. Meanwhile, AT&T reports that medical expenses for workers rose 8 percent in 2010. Union organizers pointed to the company's $4 billion in overall profit last year as a sign of fiscal health.

A similar standoff between the company and union occurred three years ago, and an agreement was reached without a strike.

AT&T shares fell 33 cents to $30.61 in midday trading Monday.