United Airlines'

pilots union said Friday it has set a Labor Day target for reaching an agreement on a new contract, but laid out initial preparations for a strike should talks with airline management break down.

The leadership council for the

Air Line Pilots Association

branch at United, which represents 10,000 pilots at the world's largest carrier, activated its "strike preparedness committee" Friday and appointed a chairman. But spokesman Herb Hunter downplayed the move, calling it simply a "preparatory step and a responsible thing for us to do."

Hunter added that the union had "high hopes" that it would have a new contract to vote on by early September. Still, he cautioned that, despite recent progress on issues like pilot seniority, wage increases and working conditions, the contract was still a "work in progress."

The union pilots began talks with United more than a year-and-a-half ago in an attempt to reach an agreement on a new contract to succeed its six-year labor contract which became amendable on April 12. Under that contract, pilots had agreed to wage and retirement pension concessions in return for a 25% stake in the airline.

"There has been some progress but we don't want to mislead anyone -- this might not be enough," said Hunter. "It could be too little too late. That's the reality, but at least we're talking."

United Airlines spokesman Joe Hopkins said the airline felt "considerable progress" had been made in negotiating a new contract with the pilots' union and hoped to reach an agreement by Labor Day.

Contract negotiations have been complicated by the airline's May 24th

proposal to buy

US Airways

(U)

. If the deal is approved by shareholders and federal regulators, the two airlines would merge their pilot seniority lists. The United Airlines pilots have come out against the current terms of the proposed merger, but said they could support the deal if issues surrounding pilot seniority and other labor-related matters are resolved.

On Friday, shares of United's parent

UAL Corp.

,

(UAL) - Get Report

closed down 1 5/16, or 2.5%, at 52.