Contract negotiations between United Airlines and its striking pilots collapsed yesterday when both sides rejected a federal mediator's proposal to settle new issues created since the strike began May 17.

No talks were scheduled and prospects are strong for a protracted, bitter dispute at the nation's largest airline just as the peak summer travel season begins with the Memorial Day weekend. Most travelers appear to have found space on other airlines, which are reporting record traffic.

United reiterated plans to hire and train replacement pilots for the 4,900 striking members of the Air Line Pilots Association. John R. Zeeman, United's executive vice president for marketing and planning, said in an interview that "we're planning to have the whole airline back by the first quarter of next year," even if none of the striking pilots returns to work.

United has been operating 209 flights to 41 airports for most of the past week, about 14 percent of its prestrike schedule. "I think we can be 25 percent up and flying by July 1," Zeeman said.

Five days of intensive talks apparently had settled what all parties agreed was the only question on the table: United's proposal to pay new pilots on a lower pay schedule than current pilots.

The negotiations broke down over seemingly insignificant "manhood" questions of union solidarity and management determination. Both sides had promised to protect the people who helped them. The pilots wanted jobs guaranteed for new pilots who refused to cross picket lines after being trained, but not yet hired, by United. Management wanted to give preferred seniority positions to pilots who did cross the lines.

Zeeman said that, "Almost all of the economic issues were resolved, but it is a package. A large part of that package is to make sure we would stand behind the people who crossed the picket line."

United has embarked on a plan that appears designed to break the union, although the company said it is ready to talk with the pilots at any time. The airline has advertised starting salaries of $75,000 per year for experienced captains and $50,000 for copilots, less than it pays its present crew members but more than non-union airlines such as New York Air or People Express pay theirs. The average salary for United's union pilots is between $80,000 and $90,000.

Additionally, at its Denver training base, United has established a 14-day training program that rests heavily on simulator flying, a method of instruction in which United has pioneered.

ALPA spokesman Don Skiados said, "We don't think they can train that fast. We think it will take them at least 10 months."

Anthony J. Broderick, the Federal Aviation Administration's associate administrator for aviation standards, said in an interview that United had submitted to the FAA a training plan "that appears to be viable" and capable of handling at least 300 pilots a month. Zeeman estimated that United could train 300 to 600 pilots a month.

Broderick said that, "If United goes into a long-term hiring spree, we expect people from other airlines to be hired because United is paying more, and that creates a bit of a ripple effect, but I'm not at all concerned about them being able to get people who are qualified."

The FAA has had United cockpit, maintenance and dispatch procedures under special surveillance since the strike began, Broderick said, which is standard procedure during an airline strike.

United said that it has hired 100 replacement pilots and that nine of them had completed training and were flying yesterday.

United has declined to reveal the cost of the strike, although estimates range from $5 million to $15 million daily.

United Chairman Richard J. Ferris said in an earlier interview that, "I've got $600 million in the bank; I got a $1.15 billion line of credit . . . . Let's assume this strike will cost us $600 million. In five years, on average, a new, lower pay scale will save $120 million a year, and that's a 20 percent return on invested capital. Tell me, is that a good business decision?"

According to sources, the issue of two wage scales was settled when the pilots agreed to have a two-schedule system for 12 years, to be renegotiated once, at the end of six years. The schedules would have merged into one at the end of 12 years.

With that settled, negotiators turned to "back-to-work" issues. The key was 500 pilots United had trained, but not hired, and had planned to use as strikebreakers. However, those 500 pilots honored the picket line in exchange for ALPA promises that they would be protected.

"The company's position is that ALPA doesn't represent those people," Zeeman said.

ALPA spokesman Skiados said that, "As long as they hold these young men and women hostage, no doubt the pilots at United Airlines will stand up for them."

The airline also wanted to give favored seniority positions to other newly hired replacement pilots and to ALPA pilots who had crossed the picket lines. Nothing is more sacred in a transportation union contract than a seniority list. Those at the top of the list get the first choice of airplanes, work schedules and routes. The union found United's proposal unacceptable.

Ralph Colliander, the staff mediator from the National Mediation Board, drafted a back-to-work compromise addressing those issues and handed it to both sides at 5:45 a.m. yesterday. They had the choice of accepting it, rejecting it or continuing to negotiate without the mediator.

At 8:30 a.m., both sides rejected it.

"We have shot our wad," Colliander told the Associated Press. "You get burnt up once in a while." Negotiators had been working 16-hour days since Monday. The final session lasted 23 hours.