United Airlines may file for bankruptcy this autumn

United Airlines' struggling parent company UAL last night warned it may file for bankruptcy this autumn unless it can somehow cut costs.

"Unless we lower our costs dramatically, filing for bankruptcy protection will be the only way we can ensure the company's future and the continued operation of our airline," Jack Creighton, United's chairman and chief executive said .

Three US airlines have filed for bankruptcy protection this year, citing the sluggish economy, competition from low-cost carriers and a downturn in travel following the 11 September attacks. The largest US carrier, American Airlines, this week announced it would trim 7,000 jobs and ground 74 jets.

United lost a record $2.1bn last year and another $851m during the first six months of 2002. The airline, which is needs to find fourth-quarter debt payments of $875m, said it was changing its business plan to build a stronger, more cost-competitive company.

UAL also said it was setting a 30-day limit to try to reach agreements with employee groups on cost-cutting. The pilots' union agreed to a 10 per cent pay cut this summer, but other groups have balked. United is awaiting a decision on its application for a $1.8bn government-backed loan. Mr Creighton told employees this week that Washington appeared poised to reject the request without more evidence of cost cutting.

UAL's stock closed at a 22-year low of $2.45; it has lost 53 per cent of its value this week. Shares in Boeing, the aircraft maker have also fallen in recent days. The aircraft maker has a $1.3bn exposure to United through its finance arm.

"The world has changed," Mr Creighton said. "Revenue isn't coming back the way the industry expected. Demand isn't returning, fares remain low and the industry is grappling with how to respond."