Mexico's Aeromexico avoids strike after pay deal

MEXICO CITY (Reuters) - Flight attendants at airline Aeromexico agreed on Sunday to a pay and benefits package that avoided a strike at Mexico's largest carrier which could have grounded around 300 aircraft, union sources said.

Union members agreed to a 4.5 percent raise, up from the company's offer of 4.25 percent, and also a $20 million savings plan that will cut benefits like parking and dry cleaning payments and subsidized uniforms.

Union leaders negotiated into the early hours of Sunday morning to cut a deal, beyond the original 12:01 a.m local time (0501 GMT) strike deadline.

Aeromexico, owned by investors headed by Citigroup's local bank Banamex, flies to a dozen cities in the United States and a handful in Europe, Asia and South America. In Mexico, it has more than 20 domestic routes.

The nearly 1,500 flight attendants of Aeromexico, which was privatized last year, originally demanded a 5 percent wage increase. At the outset of contract talks, the company wanted to make cost cuts of around $25 million.

(Reporting by Miguel Angel Gutierrez; Writing by Chris Aspin; Editing by Eric Beech)