The strike had forced Air France to cancel at least 75 per cent of its flights since June 1, costing millions of dollars a day in lost revenues. The company tried to introduce a mandatory pay cut after commissioning a report which showed that its pilots were paid 40 per cent more than their counterparts at Lufthansa and 19 per cent more than those at British Airways. The World Cup kicks off later Wednesday with a match between Brazil and Scotland, although it appeared that most of the fans had been able to get to France despite the strike by switching airlines or taking the train."This global accord is aimed at assuring the development of Air France by improving its competitivity with regards to its rivals," the company statement said. Air France also said it would scrap a two-tier salary scale, under which new pilots earned less than their colleagues. The pilots, among the most highly paid in the world, had found this detrimental to cabin solidarity. The strike was an acute embarrassment to the company, the World Cup's official carrier, and the French government. Many of the Air France planes, which were decorated with huge images of World Cup soccer stars, sat idle on the runways during the runup to the soccer tournament.

Wednesday's agreement was reached with the SNPL, the main pilots' union which represents the vast majority of Air France pilots. Air France had been locked in bitter talks with pilots' unions over the last ten days. On Tuesday night, as World Cup celebrations began in Paris, negotiations had seemed deadlocked. The pilots had been protesting a proposal for500 million francs ($83 million) in salary cuts.

Air France had said the cuts were needed to modernize the airline, which was saved from bankruptcy in 1993 but reported healthy profits in 1996 and 1997. It appeared, however, that much of the 1997 gain has been eaten up by the strike.

In the statement, Air France said part of the agreement involved guaranteed training for young pilots, at least part of which would be paid for by the company. Only one in four Air France planes was flying Tuesday, and other carriers were cashing in on the carrier's woes. British Airways estimated it was bringing in an additional 1 million pounds ($1.6 million) daily as a result of the Air France strike. Air France had arranged special flights to transport teams to their destinations during the World Cup.

An estimated one million fans are expected to travel to France for the month-long soccer tournament. Many fans have already arrived, and some have been forced to switch airlines. As well as the airline strike, France hasbeen hit in recent days by walkouts by train drivers, baggage handlers, and some bus services.