HONG KONG -- Flight attendants at Cathay Pacific Airways will be smiling after all over the Christmas holidays after settling a labor dispute on Thursday with the Hong Kong airline.

The agreement means passengers flying over the busy holiday season on Cathay, known for its top-notch service, won't have to suffer from threatened industrial action that included withholding food, alcohol and even smiles from passengers.

Cabin crew had voted at a union meeting last week in favor of the action if the airline didn't meet their demands, which centered on pay and working conditions.

The union had also threatened to work to rule, which could have delayed flights. Working to rule involves doing no more than the minimum work required in contracts and precisely following safety regulations.

The union wanted a 5 percent pay raise but the airline, which lost $120 million in the first half of 2012 mainly because of higher fuel costs, didn't budge on its 2 percent offer.

But the union's nearly 6,000 members were "very happy" with other proposals, which included higher allowances and better working arrangements such as longer rest time on certain flight patterns, said Julian Yau, vice chairman of the Cathay Pacific Airways Flight Attendants Union.

Associated Press