About 1000 short-haul pilots at Virgin Australia will receive pay rises of up to 28 per cent over the next three years after they voted to support a new labour agreement.
Their endorsement brings an end to almost 18 months of protracted negotiations between the pilots and Virgin, and respite from a power struggle between two unions competing for members.
The pay rise will help close the gap between Virgin pilots and their counterparts at Qantas. The deal was completed without industrial action, in contrast to the damaging battle between Qantas and three of its key unions including the long-haul pilots' association.
But it raises concerns for investors about Virgin's ability to keep costs under control as the airline reinvents itself as an upmarket competitor to Qantas.
About 83 per cent of the Virgin pilots represented by the two rival unions - the Virgin Independent Pilots Association and the Australian Federation of Air Pilots - voted in favour of the new agreement.
VIPA executive director Simon O'Hara said the job-security clause for pilots would "help ensure their jobs stay in Australia and cannot be cannibalised by future airline acquisitions or other outsourcing". "This is exactly the sort of clause Qantas Group has been refusing to offer its pilots," he said.
In the years after its launch in 2000, Virgin benefited from unions giving it more latitude than Qantas because of its position as a challenger. But more recently, the unions have become focused on closing the gap in pay and other entitlements with Qantas.
A Virgin spokeswoman said the airline wanted to "provide a fair and competitive contract that values the contributions of our pilot group ... and we are really pleased with the positive result".
Meanwhile, Virgin was the worst performer among Australia's four largest airlines for planes arriving or departing on time last month, as it beds down a new reservations system. Almost 30 per cent of Virgin planes were late departing, while one in three of its aircraft was late arriving.
Qantas was the best performer in February.