Iberia Lineas Aereas de Espana SA (IBLA.MC) said Wednesday it had agreed a collective labor agreement with the company's pilots' union SEPLA.

The pilots' salaries will increase 3.5% in 2008 and 0.6% in 2009, Iberia said in a filing to the Spanish market regulator.

The agreement still requires a final approval in an assembly of the company's pilots, Iberia added.

In December and January, Iberia canceled hundreds of flights due to actions by its pilots, the company said at the time. Iberia said the pilots were conducting stoppages, while SEPLA blamed Iberia for the delays.

Iberia is Spain's largest airline by passengers and revenue.

Company Web site: http://www.iberia.com

-By Jason Sinclair, Dow Jones Newswires; 34 91 395 8127; jason.sinclair@dowjones.com