American Airlines has reached a deal with union representatives in a dispute over pay and conditions for its mechanics.

Following months of negotiations, the Transport Workers Union (TWU) has tentatively accepted an agreement proposed by the airline, with some 11,500 ground staff now in line for a six per cent pay rise.

The proposed three-year contract calls for a signing bonus of six per cent, to be paid in a lump sum, followed by structural pay increases of three per cent in 2010, 1.5 per cent in 2011 and 1.5 per cent in 2012.

Under the terms of the deal, mechanics at the airline will also get more holiday time.

In a statement American Airlines’ Missy Latham explained: “This tentative agreement provides our mechanics with market-based compensation, including structural increases, and enhancements to other contract items such as vacation, holidays and sick leave.

“It also provides American additional flexibility in its maintenance operation.”

The deal will now go to TWU members for ratification.

America’s second biggest carrier has been mired negotiations for more than a year with pilots, flight attendants and ground workers as it attempts to recoup concessions made while under the threat of bankruptcy in 2003.

Earlier the TWU had asked the National Mediation Board (NMB) to release members from negotiations, potentially triggering strike action at the airline. However, this request was rejected, with both sides ordered to continue negotiations.

“Both parties worked hard and put a significant amount of time and effort into this negotiating process to reach a tentative agreement that recognises the interests of our TWU-represented employees and the company,” added Ms Latham.

“It is our understanding the TWU is recommending the ratification of the tentative agreement and will provide details regarding its terms and the ratification process to its members in the coming days.”

American Airlines argues its labour costs remain higher than comparable North American carriers, many of which reduced pay and benefits more drastically during bankruptcy proceedings over the past decade.