Under an agreement approved in 2010, pilots were slated to earn annual wage increases through 2014.
Three years of scheduled increases will now be deferred into lump-sum payments upon the agreement's expiry on April 30, 2015. But payments are conditional on the attainment of "certain financial targets."
In addition, incentives available to pilots would be deducted from any final payments.
The airline's parent company, Transat A.T. (TSX:TRZ.B) said the move to a deferred wage increase was pursued in wake of the company's efforts launched last fall to restore its profitability.
"This agreement was negotiated with respect and in a climate of openness, and it reflects the constructive dialogue that Air Transat maintains with its employees and union representatives," said Transat CEO Jean-Marc Eustache.
Spokeswoman Debbie Cabana declined to provide any details about the wage increase, possible lump sums or financial targets included in the agreement.
"It really depends on a number of things ...(but) this is a kind of concession," she said in an interview.
Meanwhile, Transat is improving its product offering, including retrofitting its aircraft, in order to return to sustained profitability despite its expectations for a challenging 2012.
It is also reducing overhead costs, has cut 143 positions, "optimized" its IT systems and outsourced aircraft to third parties. Plans call for an expansion of its network of travel agencies, especially in Ontario and Western Canada.
Montreal-based Transat lost $12.2 million, or 32 cents per share last year, compared to a net profit of $65.6 million, or $1.73 per share in 2010. Revenues increased to 3.7 billion from $3.5 billion in 2010.
Air Transat is the main carrier for Transat A.T. is an integrated international tour operator that offers package holidays to more than 60 countries but operates mainly in Europe, the Caribbean, Mexico and the Mediterranean Basin.
The president of the Air Line Pilots Associations couldn't be reached for immediate comment.
On the Toronto Stock Exchange, Transat's shares fell five cents to close at $5.40 in Tuesday trading.