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WestJet Airlines pilots who fly for the Canadian company’s budget carrier Swoop will now be unionized, a concession which resolves a key obstacle in a labour dispute with the airline, a negotiator with the Air Line Pilots Association (ALPA) said.

On Friday night, WestJet and its pilots averted a possible strike by approving a settlement process to reach a first contract, with any disputed issues to be resolved through binding arbitration.

A first contract is expected in June, said Rob McFadyen, chairman of the carrier’s ALPA master executive council.

Pilots who fly for Swoop will now be covered under the same contract as their WestJet mainline counterparts, a demand by the union, which had accused Canada’s second-largest carrier of outsourcing, he said in an interview on Saturday.

“As far as the pilots flying it [Swoop], they will be WestJet pilots,” Mr. McFadyen said.

It was not yet clear, however, whether Swoop and WestJet’s mainline pilots would have the same salaries.

Analysts have raised concerns that the pilots’ decision to unionize would raise labour costs, at a time when WestJet is adding new business-class service next year and launching Swoop as a separate ultralow-cost carrier in June.

Uncertainty because of the labour dispute prompted a decline in bookings, which are expected to hit Calgary-based WestJet’s second-quarter revenues, the company said earlier this month.

“WestJet guests can now book and travel with confidence,” the company said in a statement on Friday.

Mr. McFadyen said “pilot costs are a very small portion” of an airline’s costs per available seat mile (CASM), a key metric.

Salaries remain an outstanding issue as ALPA seeks wage parity with pilots at WestJet’s larger rival, Air Canada.

“We’re looking to bridge that gap,” he said. “There’s no such thing as a low-cost pilot.”

In an interview on Friday before the settlement was announced, WestJet spokesman Richard Bartrem said employee wages rise with years of service, regardless of whether they are unionized or not.

“I don’t want to say that CASM is necessarily the result of unionization,” he said.

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