By Kathy Fieweger ELK GROVE VILLAGE, Ill., Feb 15 (Reuters) - United Airlines on Friday said passengers began looking elsewhere for flights in anticipation of a strike set for next week after 13,000 mechanics and cleaners rejected a contract offer. With a strike deadline looming in five days at the No. 2 U.S. carrier, talks resumed Friday afternoon. Earlier this week, mechanics rejected an offer from United that included a 37 percent pay increase for the most senior workers, but also sought unspecified future wage concessions and deferred retroactive pay, among other provisions. "We clearly intend to avoid a strike," Chief Financial Officer Jake Brace told Reuters in an interview at United's headquarters in Elk Grove Village, a suburb of Chicago. "We are seeing a lower share of bookings than we have been seeing." Brace, a United Airlines veteran, is part of the negotiating team trying to hammer out an agreement after members of the International Association of Mechanics and Aerospace Workers District Lodge 141-M on Tuesday rejected the first contract offer from United, a unit of UAL Corp. (UAL), since negotiations began two years ago. The union was unhappy with the recommendation of a presidential emergency board that mechanics defer retroactive pay. The machinists said the contract contained no job security provisions and they rejected a proposed blueprint for possible wage concessions. Brace declined to speculate on various analysts' comments that a mechanics strike could force the airline into filing for bankruptcy protection. United posted a net loss of $2.1 billion in 2001, an industry record. "We still have access to the capital markets, we still have a lot of collateral in both aircraft and non-aircraft," said Brace, who conceded morale at the airline is not high. "It's (morale) OK. I think that they understand that the situation we're in is difficult." The raises would have been the workers' first base-pay hikes in eight years. Sen. Richard Durbin, an Illinois Democrat, late Friday told Reuters he was getting a good sense from both the union and UAL Chief Executive Jack Creighton that an agreement could be reached. "I'm getting positive feelings from both sides," Durbin said in a phone interview. "The threat of a strike has taken its toll on United." He made an offer to both parties in writing this week to personally help broker a deal. REASSURING PASSENGERS A separate bargaining unit of the IAM representing ground workers, including passenger service, ramp and store employees, is also negotiating on a contract under the direction of the National Mediation Board. In 1994, machinist union members, like pilots, gave pay cuts in return for a stake in the airline through an employee stock ownership plan. The IAM is unhappy that the airline's latest offer includes future wage concessions from all employee groups to help restore financial stability. The mechanics last struck United in 1979. During the summer 2000, pilots staged a work-to-rule slowdown that forced flight cancellations and left United with a sullied reputation among travelers. Subsequently, pilots represented by the Air Line Pilots Association won an industry-leading contract. Meanwhile, United is seeking to reassure passengers, sending electronic mail this week to frequent flyers, saying it was "doing everything we can to reach an agreement and avoid a strike." Mechanics had authorized a strike in December, but the Bush administration blocked it before the busy holiday travel season by appointing a special board. The board recommended pay raises even though United said it could not afford them in the wake of the Sept. 11 attacks that crushed airline travel. UNION SAYS DEADLINE REAL Brace said the retroactive pay portion of new contracts would require about $400 million in cash for both units of the IAM to be paid. The airline's cash balance at the end of 2001 was $2.6 billion. Both the union and United have said if progress was made in talks, another contract vote could be scheduled for mid-March. But union spokesman Frank Larkin called the strike deadline of Wednesday, 12:01 a.m. EST (0501 GMT) very real. "There are five days remaining, and in airline negotiations that constitutes an eternity," Larkin said. "Everyone recognizes that the (special) board did serve some purpose in providing a place for the negotiations to take off from." The White House can no longer intervene, but Congress could pass a law to extend the deadline or impose a settlement. Labor has warned Washington in plain terms not to get involved. Before recessing until Feb. 25, lawmakers acknowledged the delicacy of the talks and urged both sides to settle. "My hope is that the parties can work out any differences and not seek congressional action," said Sen. Ernest Hollings, a South Carolina Democrat and chairman of the Senate Commerce Committee. "No one wants a strike or a shutdown, but Congress is not the place to settle this dispute right now." At the very least, Congress would wait until after its recess before considering intervening in any strike. United also hopes to avoid further government involvement. UAL shares were trading near lows set immediately after the Sept. 11 attacks, when two of their jets were hijacked and crashed. The stock added 28 cents to $11.36 on Friday on the New York Stock Exchange.