CHICAGO -- United Airlines mechanics and cleaning crews rejected a contract proposal for pay raises of up to 37 percent on Tuesday, setting the stage for a possible strike next week at the financially troubled No. 2 U.S. airline, according to a wire service.

The 13,000 union members, represented by International Association of Machinists and Aerospace Workers District Lodge 141-M, also voted once again to authorize a strike against United, a unit of UAL Corp. .

The offer was rejected by a wide margin, underscoring the difficult times UAL has had with its unionized workers.

"Our negotiators opposed the emergency board's involvement," said Scotty Ford, the union's lead negotiator, in a statement. "The results of today's vote show our members agree."

With about 90 percent of eligible workers voting, 68 percent voted to reject the terms, said IAM spokesman Frank Larkin, and 86 percent gave the approval to strike. That strike could begin on Feb. 20.

TALKS EXPECTED TO RESUME

"We expect negotiations to resume almost immediately," Larkin told Reuters.
United also said talks would resume.

"If progress is made, and there is no reason to believe that it can't be, then we anticipate that another vote will occur by mid-March, without interruption of operations," said interim Chief Executive Jack Creighton in a statement.

Three weeks ago, UAL accepted recommendations from the Presidential Emergency Board that the airline offer mechanics raises, which the airline had earlier said it could not afford. UAL had a record 2001 net loss of $2.1 billion.

Although a settlement is possible, analysts noted emotions are running high despite Creighton's efforts to foster labor harmony. Creighton, a UAL board member with no previous experience running an airline, was named CEO in October. Since then, he has met with all union groups in a way predecessors rarely did, union sources said.

But he is just beginning a push to secure "billions of dollars" in concessions from employees as he tries to return the airline to stability.

Ray Neidl, analyst at ABN Amro, said mechanics were on a "suicide mission" that could take the company down. "This could be the straw that breaks the camel's back," Neidl said.

UAL shares have fallen sharply in recent weeks as fears over the carrier's financial health intensified, trading at less than half their value before Sept. 11, when terror attacks sent the airline industry into a tailspin. On Tuesday, the shares closed at $12.39 on the New York Stock Exchange (news - web sites).

If no deal emerges in the next week, a strike could begin unless the deadline is extended or Congress imposes a settlement, never before done in the airline industry.

Congress has never intervened in an airline labor dispute under the Railway Labor Act, but it has imposed contract settlements and taken other action in rail cases.

If Congress does intervene, lawmakers could prohibit a strike and set a deadline for a contract agreement, recommend another emergency board, or impose a settlement.