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Last Updated:  Friday, 14 March, 2003, 21:38 GMT
No pay deal for United Airlines

United Airlines has failed to reach a deal with its employees' unions, making it increasingly likely that the group will miss a key deadline in its bankruptcy filing.

Leaders of UA unions said they did not expect a deal to be reached by Monday, meaning the airline will have to ask the bankruptcy court to scrap existing labour agreements.

United, the second largest airline in the US, had set the Monday deadline to finalise permanent pay deals with the unions.

Its temporary pay agreements end on 30 April and the company is under pressure to save more than $2.5bn in wage costs to fight liquidation.

Analysts have said the company's difficulties, together with increasingly tough conditions in the airline sector, could force United to shut down altogether.

No deal

Monday only begins a somewhat lengthy process
Joe Tiberi, International Association of Machinists

United filed the largest bankruptcy in US history last December, with record losses of $3.2bn in 2002.

The airline pledged to cut labour costs to meet financial targets set by its lenders.

It said that even if the Monday deadline passes, it would seek further negotiations with the unions.

"There won't be a deal in time," said Joe Tiberi, a spokesman for the International Association of Machinists, which represents 37,500 United workers.

But he added: "Monday only begins a somewhat lengthy process, so there is still time to reach and ratify an agreement before the judge takes any action."

Sticking points

Mr Tiberi said there was opposition to United's plan for a low-cost carrier but gave no details of other matters that were holding up an agreement.

United's 8,800 pilots have taken a temporary 29% cut in pay but are far from reaching a permanent agreement.

"We don't have any high hopes that we can reach anything by Monday morning," said Elliot Sloane, a spokesman for the Air Line Pilots Association.

The union said talks would continue with the airline and there suggestions that a deal can be reached within the next few weeks.

Step too far

However, analysts have suggested any further erosion of the airline industry could push United into liquidation.

Credit rating group Standard & Poor's said war fears and higher fuel prices could hurt the airline to the point where it would not be able to meet its second set of bankruptcy covenants.

If that happened, its lenders could ask for an immediate re-payment of the $700m they are owed - forcing the airline to shut down altogether.

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