JOHANNESBURG — South Africa's flag carrier said Friday it had signed a new labor deal with workers to end a costly week-long strike that had forced hundreds of flight cancellations.

"South African Airways (SAA) has reached an agreement with unions to end the industrial action, which began seven days ago," the airline said in a statement.

Thousands of SAA staff went on strike last Friday after the cash-strapped airline failed to meet a litany of demands, including for higher wages and job in-sourcing.

It said unions had agreed to call off the strike with immediate effect and to instruct their members to return to work by Saturday.

The airline said it would progressively restore its full flight schedule over the weekend.

"In practical terms, this means that SAA will operate a near normal service on Saturday," it said.

As part of the deal, management and unions agreed to a 5.9 percent wage increase backdated to April, but which would only start to be paid out next March "subject to availability of funding".

Unions had demanded an eight percent increase.

Debt-ridden SAA, which has failed to make a profit since 2011 and survives off government bailouts, had initially refused any salary rise.

"This deal, particularly the fact that we offered a 5.9 percent salary increase amidst grave financial challenges, is to recognize the company's employees for the important contributions they make to the overall success of the company, economic development, and inbound and outbound tourism," said SAA CEO Zuks Ramasia. — AFP