Gate Gourmet, the sole in-flight caterer for British Airways, has struck an agreement with unions that should bring an end to a bitter dispute that was threatening just days ago to descend even further into acrimony.

Full details of the settlement, which was brokered by the TUC, will not be released until tomorrow afternoon in order to allow staff and all other relevant parties to be informed.

But, if successfully implemented, the deal would mark the end of a long-running slanging match between Gate Gourmet, owned by American venture capitalists Texas Pacific, and the Transport and General Workers Union over forced redundancies and a life-saving restructuring for the cater.

The row is also likely to have cost BA between £40 million and £50 million after 1,000 of its ground staff walked out in sympathy for 670 staff sacked by Gate Gourmet. The resulting two days of wildcat strikes at Heathrow airport resulted in more than 700 cancelled flights and delays for as many as 100,000 passengers.

In a joint statement released early this morning, Gate Gourmet, the TGWU and the TUC said that if the settlement was ratified they had "committed to working together to rebuild trust and confidence after all the difficulties of recent weeks".

"Following intensive talks throughout recent days an agreement has now been reached between the TGWU and Gate Gourmet London Limited with assistance from the TUC to resolve the long running dispute. The agreement has to be ratified by the members of the union and the company's board of directors," they said.

"Both the company and the union are pleased that a way forward has been found, and if the agreement is ratified both sides have committed to working together to rebuild trust and confidence after all the difficulties of recent weeks."

The dispute began in August when Gate Gourmet sacked 670 staff under what it claimed had been a pre-agreed deal with the TGWU. The loss-making caterer claimed that it had to restructure and change working practices in order to stay afloat.

It lost £25 million last year and is on course to lose the same amount this year.

It later emerged that the caterer's staff had also been protesting about the use by the caterer of temporary seasonal staff and some workers and union members complained fiercely about their treatment and the way they were sacked.

But the dispute really became acrimonious when Gate Gourmet refused to re-employ about 200 workers it accused of being "trouble-makers". The TGWU, in turn, complained that Gate Gourmet was adopting union-busting tactics.

Finding a way to resolve this part of the row became central to talks over recent weeks, with Gate Gourmet re--offering voluntary redundancy to all staff, including the so-called "trouble-makers" but reserving the right not to re-employ certain workers.

This morning's agreement suggests that, with the aid of the TUC, the two sides have now found a compromise.

Reaching a settlement should also mean that Gate Gourmet will qualify for an improved catering contract from BA. The airline had offered improved terms and a longer contract to the caterer but had made the deal conditional on all sides concluding the dispute.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive