SAS AB's top executive said late on Thursday that the Scandinavian airline and its pilot unions in Sweden, Denmark and Norway had reached a deal to end a strike that has grounded 380,000 travellers over the past week.
"I can with relief inform our customers and our staff that we now can put this conflict behind us. We have tonight signed a collective agreement with our four pilot unions," the chief executive, Rickard Gustafson, told a news conference.
He said it would take up to 24 hours before operations were fully up and running again.
Close to bankruptcy in 2012, SAS sold assets and cut wages and thousands of jobs in return for a life-saving credit facility. It has been profitable in the last four years but fuel costs are rising and overcapacity is still squeezing the sector.
Pilots were demanding a 13 per cent pay hike, to make up for the 2012 wage cuts.SAS, which is part-owned by the Swedish and Danish governments, said that would entail significant cost increases that would seriously damage competitiveness.
"The agreements between SAS and the pilots' unions concern predictability of scheduling, job security and salaries. In addition, the previously cancelled agreements concerning collaboration and career paths have been reintroduced," SAS said in a statement.
SAS shares earlier on Thursday closed up 9 per cent, reaching levels seen just before the strike began on Friday, supported by news that talks had resumed, and later in the day, by Norwegian media reports that the parties were nearing a deal.
Analysts have estimated the stand-off could cost SAS as much as $10.5 million a day, threatening to wipe out the airline's annual profit in short order.
Gustafson said SAS would elaborate on costs for the dispute in connection with its next earnings report.
"I am very satisfied that SAS and the pilots have reached an agreement so the passengers can fly again. I hope that there will now be peace and stability around SAS, Denmark's finance minister, Kristian Jensen, said on Twitter.