Shares of

United Airlines'

(UAL) - Get Report

stock surged 22% as investors cheered the second-largest U.S. carrier's labor deal as a sign that it may avoid filing for Chapter 11 bankruptcy protection.

After months of negotiating with its labor unions to reduce labor costs, UAL management unveiled $2.2 billion in cuts from its pilots union. With the pilots on board, this paves the way for possible announcements from the other unions, to make the $5.8 billion in total cost savings the company hopes to have over the next five-and-a-half years. As a result, UAL's battered shares jumped 57 cents to $3.13, on 5.8 million shares -- twice its usual daily volume.

"The important thing here is that we have a conclusion to the negotiations, despite the fact that many skeptics have been saying that this was going to be a stumbling block in our progress," said CEO Glenn Tilton. "That has proven not to be so. We expect that others will follow in their tentative agreements here shortly, and perhaps this week."

Labor concessions are vital to the carrier, which has applied for a $1.8 billion federal loan guarantee from the Air Transportation Stabilization Board, because it needs to show how it plans to use the money and fix its slumping business model.

But in a note to investors, one Wall Street analyst wondered if the latest news was too little, too late. "While the pilot proposal adds credence to UAL's proposed $5.8 billion labor package, it doesn't answer the fundamental question: 'Is $5.8 billion enough?'" wrote J.P. Morgan airline analyst Jamie Baker.

Also, the company has limited time to carry through on Tilton's expectations that flight attendants, service employees and machinists will come through with specific cost cutting plans of their own. Over the next five weeks, UAL has $945 million in debt payments to make and has already warned that Chapter 11 was likely if it could not raise additional capital. Furthermore, the company is burning $7 million in cash each day, which means that even if it does receive the government-backed loan, there is a chance it may still end up bankrupt.

But for now, the plan seems to be to do whatever it takes to get the loan from the ATSB. This week, the carrier said it plans to send a management team to the ATSB to present the airline's case in person.