United Airlines (search) and unions representing its mechanics and baggage handlers edged closer to long-term contract agreements Friday as a bankruptcy court trial on the carrier's bid to terminate existing pacts moved closer to conclusion.

The airline and unions are working against a rough deadline of sometime next week, before Judge Eugene Wedoff issues a ruling that could trigger a threatened strike by United's workers if it authorizes the breaking of tentative contracts.

Both unions — the Aircraft Mechanics Fraternal Association (search) and the International Association of Machinists and Aerospace Workers (search) — said key progress was made but neither expected final agreement on new contracts until early in the week.

IAM spokesman Joseph Tiberi said negotiators had resolved the talks' biggest sticking point, over valuation, and would return to the bargaining table late Sunday to try to nail down a final settlement.

"It was a very big sticking point," he said. "We're one step closer to an agreement."

The company is seeking an average of $176 million in annual cuts from the machinists over five years in wages and benefits; the dispute over valuation involved how much value to put on lost holidays or vacation days, for example.

The other set of talks, involving AMFA, took place at a hotel about a mile away and also was inching toward a deal.

"There definitely is movement, progress," said Terry O'Rourke, a San Francisco-based mechanic who was sitting in on the talks. "But I have a sense that it's probably going to go through the weekend."

Mechanics have been insisting on some assurance of job security before agreeing to the latest cutbacks. United, a unit of UAL Corp. (search), is seeking a total of $96 million in annual cuts from mechanics as part of total targeted labor savings of $700 million annually. Pilots and flight attendants agreed earlier to five-year deals, although the flight attendants' pact is in arbitration.

Members of both unions would have to ratify any deals. The mechanics' group rejected a tentative agreement in January, with 57 percent voting against it.

United's chief financial officer, Jake Brace (search), said the company was prepared to negotiate through the weekend to secure consensual agreements that members would ratify.

"We are hopeful that the good tone and nature of the talks continues," he said after the third day of testimony in the trial.

At a trial expected to end sometime next week, the nation's second-largest airline is attempting to demonstrate via expert testimony that labor cutbacks are necessary for the second time in bankruptcy so it can clean up its finances and compete successfully after exiting Chapter 11 bankruptcy.

About 20,000 United ramp and customer service workers are represented by IAM District 141; AMFA is negotiating on behalf of about 7,100 mechanics.

Besides the mechanics and machinists, the flight attendants' union has threatened to strike over the latest round of labor givebacks, particularly the elimination of defined-benefit pensions.