The deal will save the airline $2.09bn (�1.33bn) over six years and is seen as a major step forward in its bankruptcy restructuring.

The mechanics union was the final group of workers to agree new contract terms.

Simultaneously, American Airlines sealed deals with two of its unions, which it hopes will keep it from suffering United's fate .

Both airlines still have to wait till union members can vote on the plans before they are finalised.

United got a further boost on Friday when pilots ratified an agreement reached last week on new contracts.

'A big step'

United Airlines, and its parent company UAL, filed for the largest airline bankruptcy in December.

The carrier was hit by the downturn in air travel following the 11 September terror attacks and the general economic slowdown.

United was also hindered by having some of the highest wage costs in the industry, and, under the terms of its bankruptcy financing, had to make big cuts in labour costs.

The airline faces a 1 May deadline to show that it can make sufficient savings on its wage bill.

"It's a big step," said Ray Neidl, airline analyst at Blaylock & Partners.

"It is going to contribute to them either making their financial hurdle in May or getting closer to the financial hurdle."

American Airlines

The airline industry has seen passenger numbers hit again in recent weeks by the war in Iraq and the spread of the deadly Sars virus.

On Thursday, American Airlines chief executive Donald Carty warned that the world's largest carrier may still have to file for bankruptcy even if union workers agreed to new conditions.

"I must tell you honestly, that given the impact of the war in Iraq and a continued weak economy, the possibility of a bankruptcy filing remains, these tentative agreements notwithstanding," Mr Carty said.

He warned that if workers fail next week to vote in favour of the plans, which will save American $1.8bn a year, bankruptcy could be imminent.