NEW YORK (CNN/Money) - Troubled carrier United Airlines and its ground workers may be closer to settling contentious negotiations as the company awaits a bankruptcy court's decision to void union contracts, according to a report published Friday.

The Chicago Tribune said United, a unit of UAL Corp., which is struggling to emerge from bankruptcy protection, has said it cannot afford the pay and benefit levels promised in the contracts with members of the International Association of Machinists and Aerospace Workers.

If United can come to terms with the both unions, it would eliminate the need to finish the ongoing trial to void their contracts, the report said.

According to the Tribune, attorneys for the unions said "progress" was being made, while Jake Brace, the airline's chief financial officer, said he is encouraged by the discussions.

"I suspect that the trial has spurred action on both sides," Brace was quoted as saying.

Todd Snyder, a managing director at Rothschild Inc. and United's financial adviser, testified for United and was quoted as saying during the trial that United needs all the savings it is seeking in order to avoid defaulting.

The airline has reached deals with its other labor groups, the report said, and is in arbitration with the flight attendants union.

Earlier this week, the airline achieved a victory worth nearly $10 billion to its bottom line when bankruptcy judge Eugene Wedoff agreed that the federal pension insurance fund could take over United's pension retirement programs, the report said.

The airline has said dumping pension obligations is crucial if it is going to leave bankruptcy protection, the report said.

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