The industrial unrest had led to Qantas grounding its entire fleet in October in an attempt to force a resolution. The strikes and grounding sent Qantas shares to a near record low and cost it A$194 million before the government forced all sides to take their cases to Australia's labour umpire.

Qantas agreed a deal that the engineers' union said gives its members job security and a 3 percent annual pay rise that would remain in force till December 2014.

The pilots' association and the union representing baggage handlers and caterers said they remained willing to negotiate a deal ahead of a binding settlement imposed by the labour umpire.

"It is a positive sign. There is more of an opportunity to focus on the fundamentals now," said David Liu, head of research at ATI Asset Management, a Qantas shareholder.

Steve Purvinas, secretary of the engineers' association, said the agreement ensured jobs remained in Australia.

"I hope the other two unions follow us," Purvinas added.

A spokesman for the transport workers' union said job security was a key issue and he hoped his union could reach a deal achieving something similar.

Shares in Qantas fell 3 percent on Monday, almost in line with the broader market .AXJO, as worries about the European debt crisis prompted concerns over customers cutting back on air travel.

POSITIVE OUTCOME

Under the deal, a new licence category has been brought in for engineers and the union has backed away from a demand for a hangar to be built to allow heavy maintenance on Airbus A380 double-decker jumbos in Australia, instead of in Asia.

"The arbitration process is a long and drawn out one, so there would obviously be benefit for both management and AIPA (The Australian and International Pilots Association) if we came to an agreed position," said Pilots' Association President Captain Richard Woodward.

Qantas Chief Executive Alan Joyce said the deal with the engineers was a positive outcome for the airline after a damaging industrial campaign.

The strikes and grounding left thousands of Qantas passengers stranded, sunk forward bookings and hurt the airline's brand image.

Qantas has since said forward bookings have come back to almost normal since certainty returned.

(Reporting by Narayanan Somasundaram and Sonali Paul; Editing by Ed Davies and Vinu Pilakkott)

• A Permanent Economic Emergency