United Express Contract Ends With Air Wis.

WASHINGTON (AP) -- UAL Corp. is ending its agreement with Air Wisconsin Airlines Corp. to fly regional jets for its United Express unit, transitioning the service to other carriers over a year's time, according to court papers filed Thursday.

The company is trying to cut costs in an effort to emerge from Chapter 11 bankruptcy and is considering various proposals from regional airlines to fly United Express routes.

Papers filed in the U.S. Bankruptcy Court in Chicago said the company wasn't able to reach a deal to reprice its existing contract with privately held AWAC, and decided on a transition away from AWAC's services, rather than simply rejecting the agreement.

United spokeswoman Jean Medina Thursday said the agreement allows a ''smooth transition for our customers, and Air Wisconsin's customers as well.''

SkyWest Airlines Inc. and GoJet Airlines will take over some of the routes, but United is still looking at the rest.

Those carriers announced Monday they reached a deal to provide about 30 aircraft for United Express by early 2006. Court papers said the carriers will fly 70-seat regional jets on the routes, rather than the 50-seat jets Air Wisconsin now flies.

Air Wisconsin representatives weren't immediately available for comment.

Air Wisconsin flies about 70 planes for United, Medina said.

The transition period will be about a year, if the court approves United's motion at a hearing scheduled for April 22.

The Appleton, Wis.-based company got approval in March to provide a $125 million loan to help finance US Airways Group, and in exchange got the right to fly up to 70 regional jets for US Airways Express. People involved in US Airways' bankruptcy called the deal a hedge by Air Wisconsin against losing the United contract _ ensuring it had a place for its aircraft.

US Airways representatives weren't immediately available.

Because it is in bankruptcy protection, United can reject unwanted contracts, though it must pay a penalty to do so. In court papers, the company said it is trying to take advantage of downward price pressure in the regional airline business to cut the cost of its United Express contracts.

Medina said the company has been successful thus far in negotiating lower prices for regional jet service.

The phase-out agreement with Air Wisconsin and United also provides for the refund of certain ''additional payments'' made under the Air Wisconsin contract that United creditors complained about, amends a ground service agreement and resolves other claims between the airlines.

Separately, Medina said an 11.5 percent interim pay cut for United employees represented by the International Association of Machinists was extended through May 31 by the court at a hearing Wednesday. The order also continues a reduced sick pay provision.

The court ordered the pay cuts to provide United with immediate savings, while the company attempts to negotiate long-term pay reductions and pension changes with the union.

United, which is based in suburban Chicago, filed for Chapter 11 bankruptcy law protection in 2002.

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