CHICAGO (AP) – United Airlines and its machinists’ union announced an agreement in principle on a contract in federal bankruptcy court Tuesday, heading off the need for a ruling that could have triggered a strike.

A formal contract agreement is to be presented June 17. Judge Eugene Wedoff gave the two sides until then to work out remaining details.

The agreement came just hours after United’s mechanics ratified a five-year contract, giving the nation’s No. 2 airline a pair of crucial labor victories that it needed to avoid an employee walkout and strengthen its bid to come out of bankruptcy.

The tentative deal with the International Association of Machinists and Aerospace Workers, representing 20,000 baggage handlers, customer service representatives and other ground workers, was disclosed with Wedoff poised to rule on United’s request to break the contract. The IAM had warned it would shut down the carrier with a walkout if that happened.

The two sides bargained through much of the holiday weekend and worked out the basic terms of an agreement in negotiations at an undisclosed location near O’Hare International Airport shortly before the afternoon court session.

The company asked for $175 million in yearly concessions from the IAM, its largest union, to complete a companywide package of $700 million in annual labor savings. When complete, the tentative pact must still be ratified by the IAM’s membership.

AP-ES-05-31-05 1519EDT