United to file motion to void union contracts = = = = Thursday December 26, 3:44 PM EST = By Meredith Grossman Dubner CHICAGO, Dec 26 (Reuters) - UAL Corp.'s (UAL) United Airlines was expecte= d to file a motion in U.S. bankruptcy court on Thursday that would allow = it to abolish its labor contracts with unions if it cannot reach wage cut= s needed to satisfy lenders. The world's No. 2 airline, which filed the largest bankruptcy in aviation= history on Dec. 9, has said it needs to trim labor costs by $2.4 billion= a year in order to meet the terms of its financing agreements. A filing under Section 1113 of Chapter 11 of the U.S. bankruptcy code wou= ld give the airline adequate time for hearings on the issue before a Feb.= 15 cost-cutting deadline set forth by UAL's lenders. Spokespeople for both the unions and the airline have said they hope to r= each voluntary deals. = UAL has access to $800 million of debtor-in-possession, or DIP, financing= from four large institutions to help it operate while in bankruptcy. But= the airline cannot tap into an additional $700 million without achieving= specific cash flow targets that require deeper cost cuts. Once the Section 1113 filing is set in motion, a series of hearings could= leave the unions with court-determined pay scales and work rules -- a bi= g incentive for the unions to reach voluntary deals with the airline quic= kly. United has about 83,000 employees, and 80 percent of them are unionized. NO NEW NEGOTIATIONS UNDER WAY A spokesman for the International Association of Machinists, which repres= ents United's 37,500 mechanics and maintenance workers, told Reuters earl= ier this week that there were no new negotiations under way. Spokespeople for both the machinists and the Air Line Pilots Association = said last week that they would not be surprised by a Section 1113 filing,= which they called an expected part of the bankruptcy process. They noted that bankrupt US Airways Group (UAWGQ) also filed a Section 11= 13 motion but was able to reach and ratify voluntary deals with its union= s before having to void union contracts. A coalition of unions several months ago, in an effort to keep United out= of bankruptcy, had agreed to $5.2 billion in labor cost savings over 5-1= /2 years. But that figure was far below the $9 billion former Chief Execu= tive Jack Creighton said was necessary to turn the airline around. UAL's new CEO, Glenn Tilton, has hinted that the $9 billion target -- or = perhaps a larger one -- was likely to materialize as a more realistic lev= el. UAL's bankruptcy filing came several days after the airline failed to win= federal support for a $2 billion private-sector loan. The airline is expected to burn through between $20 million to $22 millio= n a day in December, UAL attorneys have said. The cash burn rate is seen = falling to between $10 million and $15 million a day in January. In a recorded holiday message to employees, Tilton noted the continued ef= forts of the unions and the company to reach labor cost savings. "I also want to take the occasion to acknowledge the work and collaborati= on between the union representatives and leadership and the management te= am that are working very hard today to reach agreements as we move forwar= d," Tilton said. UAL shares were up 23 cents, or about 22 percent, at $1.28 in late trade = on the New York Stock Exchange on Thursday. = =A92002 Reuters Limited. = Roger EWROPS