Trade unions at United Airlines have offered to accept $5bn in cost cuts on staff, including pay cuts, to try and save the firm from bankruptcy.

We are committed to responding to the coalition and its members in the days ahead to finalise an updated business plan

United Airlines parent firm

The airline's top management has warned for months that the second biggest US carrier cannot survive without sweeping cost cuts.

But the cutbacks the unions have accepted are little more than half what the airline was seeking.

Management had asked for $9bn in cutbacks over the next six years, but a grouping of five labour unions has rejected that, offering $5bn spread over five years instead.

Grim horizon

Loss-making United Airlines is approaching a financial crunch.

It is due to pay back $900m of debts to its creditors in November and lost $2.1bn in 2001.

The union coalition made their proposals in a letter to Glenn Tilton, the recently appointed boss of the airline's parent firm, UAL.

The details have not been published, though the unions have estimated their proposal could add up to $3bn to the firm's core earnings.

United Airlines has issued a cautiously non-committal statement in which it promised to "study the framework very carefully".

"We are committed to responding to the coalition and its members in the days ahead to finalise an updated business plan," it said.

United is 55% owned by its staff, giving the unions greater-than-usual influence over restructuring decisions.

Loan guarantees

The airline has applied for federal aid in the form of loan guarantees and has said it could be in financial difficulties if it does not receive them.

It wants the Air Transportation Stabilization Board (ATSB), which was set up to support the airline industry after the September 11 attacks knocked away ticket sales, to guarantee loans worth $1.8bn.

However, the board has told the airline it needs to do more to get concessions from staff.

"We hope our commitment will help United qualify for an ASTB loan guarantee," said an official of the International Association of Machinists (IAM) of the proposals.

When he accepted the job of UAL boss, Mr Tilton said restoring the company's fortunes would mean "working co-operatively with all of United's stakeholders on a plan to address near-term financial issues and develop a much-needed strategy for renewed growth".

His predecessor, Jack Creighton, warned that the airline could go bankrupt in the autumn without major cost savings.

US Airways deal

Meanwhile a federal judge has approved a $740m deal between the bankrupt airline US Airways and an Alabama pension fund.

The deal will give the Retirement Systems of Alabama (RSA) a 37.5% stake worth $240m in US Airways when the airline emerges from bankruptcy.

The fund is also providing $500m of financing to help US Airways to operate while it works through the bankruptcy process.

"RSA showed a tremendous vote of confidence in the company's restructuring plan," said John Butler, US Airways' main bankruptcy attorney.

US Airways is nearly $11bn in debt, but has said it hopes to emerge from bankruptcy early next year.