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Already in the midst of trying to negotiate a new contract with pilots whose refusal to work overtime has been blamed for the cancellation of thousands of its summer flights

, United Airlines

now faces more potential labor problems.

On Wednesday, the contract for United's 44,000 groundworkers ran out, adding one more issue for the airline to resolve as it tries to win approval to acquire

US Airways

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Officials of the

International Association of Machinists

, or IAM, the union representing the United workers, say they have not ruled out the possibility of exercising their right to refuse overtime work. However, no organized action has been approved. Those covered by the contract include mechanics, ramp workers, reservation and ticket agents and baggage personnel.

The possibility of labor-related flight reductions has to be weighing heavily on officials at the world's largest airline. The last quarter was one of the worst ever for United in terms of delays and cancellations - many of them due to weather and air-traffic-control backups.

Other airlines are suffering similar problems. But United's situation has been exacerbated by the forced 4,800-flight reduction in the summer schedule after United members of the

Air Line Pilots Association

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exercised their right to

refuse to fly overtime when their contract became amendable in April.

The cuts represent almost 2% of the total flights operated between May and September by United, which is owned by Elk Grove Township, Ill.-based


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. The carrier operates about 2,500 flights a day.

The groundworkers' contract expired Wednesday after almost seven months of negotiations between the union and United. Still, Frank Larkin, a spokesman for the United union workers, said it is not unusual to extend talks beyond the amendable date, and that progress has been "satisfactory" in negotiations now underway in San Francisco and Chicago. Issues over job security, pension and retirement and wage increases remain to be resolved.

United spokesman Kurt Ebenhoch said progress is being made in the talks with the unions representing both the machinists and pilots. "We are very committed to the process," he said.

Still, the labor issues put more pressure on the airline as it awaits approval from US Airways shareholders, the

U.S. Justice Department

, and states' attorney generals for the $4.3 billion proposed merger between United and US Airways. The two airlines have said they hope to complete the deal by early 2001.

That is unlikely to happen unless labor issues have been resolved. In a letter to IAM members earlier this week, international president R. Thomas Buffenbarger, bluntly stated: "Either the United negotiations prove successful. Or the merger dies. Period."

The United unit of the Air Line Pilots Associations has also expressed "strong concerns" about the merger, but says it could support the deal if issues surrounding pilot seniority and other labor-related matters are resolved. The union represents about 10,000 United pilots.

UAL finished up 15/16, or 2%, at 60 1/6, while US Airways finished down 3/16, or 0.5%, at 42.