Shares in the parent of United Airlines, UAL, soared 3% following news of an agreement to cut costs sharply.

America's second largest airline said its pilots had tentatively agreed to measures which would cut costs by $2.2bn (�1.41bn).

The deal raised hopes that United will manage to cut labour costs by 15% and therefore remain solvent.

The airline had warned that it could be forced to apply for protection against bankruptcy unless its cash shortage was alleviated in some way.

UAL's stock soared to about 30%, yet it was trading down 85% since before the 11 September attacks last year.

Further deals

United's efforts to convince its staff to take pay-cuts continue.

Machinists, flight attendants and salaried employees have not agreed as yet, though "we expect that others will follow in their tentative agreements here shortly, and perhaps this week", chief executive Glenn Tilton said.

The cost cutting measures would make up a crucial part of the airline's efforts to return to profitability after 30 months of losses.

But more importantly, unless the workers agree to pay cuts, the airline will not be granted a $1.8bn federal loan guarantee that would enable it to keep afloat.

Down then up

The five-year deal with the pilots' negotiators will soon be voted over by 8,800 pilots.

The deal calls for an 18% pay cut over the next two years.

In addition, the pilots must accept reductions in the number of hours worked and changed work rules.

In 2005, pay would then start rising again by 4.6% per year until 2008 when pilots should be back earning what they do at the moment.