NEW YORK (CNN/Money) - Shares of United Airlines parent UAL Corp. soared Thursday, then fell victim to late selling, following a tentative labor pact with the company's largest union, raising hopes it will win the federal loan guarantees it needs to avoid filing Chapter 11.

UAL (UAL: Research, Estimates) shares were up as much as 73 cents, or 25 percent, before falling, but did close up 22 cents, or 7 percent, for the day at $3.32.

The late selling is a smart move, according to analysts who said they still have doubts about the long-term outlook of the world's No. 2 airline, despite the good news.

Standard & Poor's airline equity analyst Jim Corridore says United still will be burdened by a high debt level and higher cost structure than competitors. He raised his recommendation on the stock to "avoid" from "sell" only because he no longer thinks the stock is a good short play for investors who are betting on further declines. But he still thinks investors should be getting out of any shares they currently hold.

"If they get the (federal loan guarantee) approval, the shares could see another bounce higher," he said. "But I would suggest that shareholders use any gains today or then to reduce their holdings."

Wednesday evening the airline reached an agreement with the International Association of Machinists that the union says should save $1.5 billion over the next 5-1/2 years. The agreement is significant because not only is the IAM United's largest union, representing 37,500 ground workers, but also because it has been the most resistant to accepting wage concessions. The deal still must be approved by rank-and-file members, though.

According to details of the agreement posted on union Web sites, UAL has also agreed not to try to reject collective bargaining agreements with machinists if it files for bankruptcy unless its solvency is threatened.

The savings from the agreement, along with the estimated savings from the other two major unions and the non-union employees, come to $5.4 billion over that time, just short of the $5.8 billion the company had set as its goal. Some smaller unions also have agreed to cost-cutting agreements, but it is not clear if those groups together could save nearly $400 million during that time. But UAL management says it is pleased with all the agreements.

"This is the last of the tentative agreements with our work force and underscores the significant progress we have made in recent weeks toward cutting costs," UAL CEO Glenn Tilton said. "The IAM, along with our other unions, has stepped up to the challenge by cooperating in an unprecedented way to set the framework for a stronger, more competitive airline."

But some observers question whether the company has the savings necessary to win the approval for the loan guarantees, and some question whether the carrier can make a go of it even with the federal assistance.

"If they get the loan guarantees, they might be able to struggle by for the time being, but they haven't improved their cost structure enough," said Ray Neidl, analyst with Blaylock & Partners. "Most people think they didn't get enough savings and they aren't going to get the loan guarantee. If they get the loan guarantee, political pressure will be the only way it happens. It's a Hail Mary pass."

UAL's next step is to win approval from the Air Transportation Stabilization Board, the three-member panel that considers requests for loan guarantees, for the $1.8 billion in guarantees it is seeking. The company's next major loan payment, $375 million in aircraft-backed bonds, is due Dec. 2, and some analysts have speculated the airline could be forced to seek bankruptcy protection without ATSB approval by then.

United probably has the money necessary to make that payment, but its management would be reluctant to make such a payment without approval of the guarantee. The ATSB has not said when it will act on United's request. The board meets on a as-needed basis and its next meeting has not been set.

The board has rejected loan requests for some smaller airlines, including Vanguard Airlines and National Airlines, which both ceased operations after they were turned down, and Spirit Airline, which is still in operation.

But a bankruptcy filing is possible even after winning approval for loan guarantees. US Airways Group filed for bankruptcy after winning conditional approval of $800 million in loan guarantees. Some industry observers think a United bankruptcy remains likely, even with the labor deals and loan guarantees.

"The fact you have credit and can fund your losses doesn't mean you've solved anything; you're just putting off the ultimate payoff," said one industry consultant, who spoke on the condition his name not be used.

Corridore said despite his doubts about the airline's long-term prospects, he now believes ATSB approval is likely, a change from his previous outlook for the carrier's chances.

"It's a huge step for the company today," Corridore said.