The union representing Cathay Pacific flight crews said on Thursday it had shelved plans for industrial action over the Christmas holidays after the airline agreed to improve their working conditions. Staff had threatened to stop serving alcohol and smiling at passengers as part of a \"work-to-rule\" action over a salary dispute that could have thrown hundreds of flight schedules into chaos. But the 6,000-strong Cathay Pacific Airways Flight Attendants Union said it had decided to call it off after reaching a deal with the flag carrier following a two-day negotiation mediated by the city\'s labour department. \"It is a favourable agreement for the cabin crews,\" union general secretary Tsang Kwok-fung told AFP. He said although the deal did not include a five percent salary increase that the union had demanded, it will see an improvement in rest hours and flight patterns that will also boost their allowances. \"We would like to wish all passengers flying with Cathay a happy holiday now,\" Tsang added. Cathay chief executive John Slosar hailed the deal as the \"best possible outcome\" and said passengers \"can now look forward to their holiday travel plans with confidence\". The protest was sparked by Cathay\'s announcement last month that it was giving a two percent pay rise to its employees in 2013, on top of a discretionary one-month bonus for 2012, falling short of the union\'s demand. The carrier has been trying to trim costs after it fell into the red in the first half of this year with a HK$935 million ($121 million) loss, partly due to high fuel prices.