UPDATE 1-Norwegian Air shares surge after strike called off

Mon May 19, 2014 5:20am EDT

Related Topics

* Some 1,300 cabin crew won't strike after deal

* Union says agrees similar pay deals in Norway and Denmark

* Two sides to go to court over changes to pension schemes

* Shares up 6 pct (Adds Norwegian Air, analyst, shares, background)

By Camilla Knudsen and Ole Petter Skonnord

OSLO, May 19 (Reuters) - Some 1,300 cabin crew at Norwegian Air, Europe's third-biggest budget airline, will not go on strike after a trade union and the company struck a deal, the parties said on Monday.

Shares in Norwegian Air jumped on the announcement and were among the best performers on the Oslo bourse, up 6.5 percent by 0807 GMT, outperforming the Oslo benchmark index which was up 0.2 percent.

"It is clearly positive that the company has avoided a full-scale strike," said Kenneth Sivertsen, an analyst at Oslo-based brokerage Arctic Securities. "The strike was acting as a dampener on bookings."

Besides pensions, the main contention was the airline's decision to move its Norwegian and Danish cabin crew members into separate subsidiaries, which unions said reduced their bargaining power.

At first glance it would appear Norwegian Air had been able to reach an agreement which was not too costly for the company, Sivertsen said. "The most important thing was to keep working conditions at a reasonable and competitive level, and it looks like Norwegian Air has done that. So they will be able to grow in Europe," he said.

Trade union Parat, which said the deal was reached in the night from Sunday to Monday, said it achieved some of its results, including collective pay agreements that are similar in both Norway and Denmark. It also got more say for employees on their pensions.

However the union and company management will go to court over what the union described in a statement as unauthorised changes to cabin staff pension schemes.

Norwegian Air welcomed the agreement. "It is good we reached a deal and that we can look forward," Norwegian Air Chief Executive Bjoern Kjos said in a statement.

Norwegian Air is the third-biggest budget airline by passenger numbers after Ryanair and Easyjet. (Writing by Gwladys Fouche; Editing by David Holmes)

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