CHICAGO, December 10 (IslamOnline & News Agencies) - United Airlines filed for bankruptcy Monday, December 9, in the largest aviation industry failure ever, and warned that some radical cost cutting was required to make it competitive again.

"We are going to look at the entire business ... every component of the margin from labor costs, to non-labor costs to revenue realizations, and to profit improvement initiatives.

"All of those things need to be considered to dramatically improve our margin ... which obviously is insufficient," Glenn Tilton, chief executive of United's parent company, UAL Corp., told reporters at Chicago O'Hare International Airport.

The long-awaited announcement came just four days after the struggling carrier had a request for a 1.8 billion-dollar loan guarantee turned down by a federal panel, reported Agence France-Presse (AFP).

Shut out from the international credit markets, hemorrhaging cash at the rate of seven million dollars a day, and with almost one billion dollars in debt repayments due this week, the company was forced to seek protection from creditors.

Tilton expects the company to emerge leaner and more flexible from the Chapter 11, court-supervised re-organization 18 months from now, with a much different strategy than the one it has relied on so far.

"We need to broaden our customer base and we certainly need to lower our cost structure.

"We have to realize that the whole business has changed," Tilton said.

Specifically, the carrier wants to move away from its reliance on business travelers who are willing to pay top dollar for flights, and appeal to more cost-conscious consumers who shop around for a cheap flight on the internet, or fly with low-cost carriers like Southwest.

With four billion dollars in losses over the past two years, caused by a slump in air travel that was exacerbated by the September 11 attacks and ensuing intensified airport security, the company has few options.

But the changes come at a price, and that inevitably means more job and wage cuts for United's 83,000 employees, further reductions in capacity, and even a sale of certain assets.

In a first - and possibly symbolic step, United announced Monday it was going ahead with a proposed wage cut for senior executives.

The average 11 percent cut will take effect December 16 along with pay cuts for salaried employees and management ranging from three to almost 11 percent.

The carrier will begin discussions with a coalition of unions representing pilots, flight attendants, mechanics and various service personnel this week.

Most of those workers had already approved 5.2 billion dollars in pay cuts over the coming five and a half years to help their employer out of its financial predicament under a previous financial recovery plan.

But the carrier now is clearly bent on dismantling labor contracts which it says make it uncompetitive.

The company's "collective bargaining agreements restrict United's ability to reduce its costs and maximize its revenues in ways that are no longer affordable," it said in court papers, adding that it would require "changes to work rules that place the debtors [airline] at an extraordinarily competitive disadvantage."

United has the highest labor costs in the industry.

In 2001, labor expenses accounted for almost 40 percent of operating costs (seven billion dollars).

Negotiations are unlikely to be easy.

"It's hard to underestimate the level of animosity between certain labor groups and management," because of labor disputes dating back years, said Joseph Schwieterman, an aviation analyst at DePaul University in Chicago.

The carrier is also likely to switch to smaller jets, with 140 seats or less, to service certain routes, Schwieterman suggested.

Monday's Chapter 11 filing was not a surprise: United had been preparing for the contingency for months, and had a 1.5 billion-dollar, debtor-in-possession or asset-backed loan ready.

A bankruptcy judge gave his permission for UAL Corp. to draw down 800 million dollars of that loan Monday to cover expenses such as employee wages and benefits and bolster its cash-on-hand fund.

The coming months are likely to see UAL's balance sheet under increased pressure, with daily losses expected to more than triple to 20-22 million dollars a day in December, before easing off to 10-15 million in January, according to lawyers for UAL.

Meanwhile, United's unions, while expressing disappointment at the Chapter 11 filing, rallied behind management.

"We are committed to continuing the unprecedented cooperation between employees and management that will be necessary to turn United around and successfully shepherd it through reorganization," the Airline Flight Attendants union (AFA) said in a statement.

"Pilots have worked closely with United Airline's management to support the ATSB loan process, and they will continue to work with them to save their airline," the Air Line Pilots Association (ALPA) said in a statement.

Shares in UAL closed at 93 cents per share on the New York Stock Exchange, unchanged from close of business Friday, after seesawing up and down all day.