Deutsche Lufthansa AG (LHA)’s Austrian Airlines unit has reached an agreement with labor representatives over reducing flight crew costs, avoiding the need to transfer 2,100 staff to cheaper contracts at a lower- cost subsidiary.

The agreement, if approved by the 600 pilots and 1,500 cabin crew, would preclude moving the employees to contracts at regional operator Tyrolean Airways, Austrian Airlines spokeswoman Patricia Strampfer said by telephone.

Austrian had said last week that it would implement the “Plan B” of forcing staff to accept contracts at Tyrolean in order to deliver a 220 million-euro ($289 million) cost-savings program after talks failed to make progress.

“We have to reduce our personnel costs, which due to a number of mechanisms increase by 10 percent each year,” Strampfer said. “Now this new collective agreement has been agreed, we don’t need the Plan B.”

To contact the reporter on this story: Alex Webb in Munich via awebb25@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net