International Airlines Group has revealed Iberia has reached agreement in principle with its pilots’ union, SEPLA, to introduce permanent structural change and improve the airline’s viability.

It also heralds a new positive working relationship between Iberia and SEPLA after years of conflict, IAG said in a statement.

This landmark agreement provides a strong foundation to put Iberia on the path towards sustainable profitable growth – the more positive of the two scenarios outlined at IAG’s Capital Markets Day in November 2013.

It will also enable Iberia to become more competitive and reduce its cost base.

The agreement is designed to see a fundamental productivity improvements within Iberia, with salaries also to remain frozen until 2015 as outlined in the Mediation Agreement.

After that date, increases will be subject to the airline’s profitability.

The earlier Mediation Agreement provided a 14 per cent salary reduction for pilots and an additional four per cent cut linked to the productivity agreement.

Under the new deal, with these productivity improvements, the four per cent will be returned.

The deal also facilitates the growth of Iberia and Iberia Express.

Luis Gallego, Iberia’s executive chairman, said: “I would like to thank the efforts made by SEPLA, the pilots and Iberia’s management team who worked together to reach this agreement.

“This ground breaking deal reduces the cost structure and provides the foundation for the airline to grow profitably.

“A strong and profitable Iberia can protect jobs in the long term and boost tourism which is a key driver in Barajas and Spain’s economic recovery.

“Iberia is the natural airline choice for Latin America and this agreement will enable it to be a formidable competitor and build on its new brand, providing customers with great service and an extensive network.”

This agreement in principle is subject to the approval of SEPLA’s general assembly.