Unions representing pilots for Southwest Airlines Co. (LUV) and AirTran Holdings Inc. reached an agreement for a combined seniority list, avoiding arbitration as Southwest works to integrate the carrier it acquired in May.

The Southwest Airlines Pilots Association and the Air Line Pilots Association reached an agreement in principle to create the list, Dallas-based Southwest said in a statement.

The accord governs how AirTran pilots will be placed into Southwest's seniority list, which determines their pay, schedules and routes. It's the first of six such agreements that must be completed between labor unions representing various groups of workers for the two airlines, said Paul Flaningan, a spokesman for Southwest.

"It's really a big milestone for the pilots to come to this agreement in principle," Flaningan said. "It gives a signal to the other unions that everyone is moving forward with the integration."

Southwest is working to obtain a certificate from the Federal Aviation Administration to operate as a single carrier, he said, and expects to have it by mid-2012.

Avoiding Arbitration

"The unions and company negotiating teams have accomplished a task that is rare in this industry," resolving seniority issues without requiring outside arbitration, Southwest's Chief Operating Officer Michael Van de Ven said in the statement. The agreement is subject to approval by the unions' boards and members.

Southwest completed a US$1 billion cash-and-stock purchase of Orlando, Florida-based AirTran on May 2, adding international flights for the first time and service to Atlanta's Hartsfield- Jackson Atlanta International Airport, the world's busiest.

Calls to Neal Hanks, a spokesman for the Southwest Airlines Pilots Association, and to Jason Ruszin, a spokesman for the Air Line Pilots Association, weren't immediately returned.