American Airlines pilots will receive an average pay increase of 11.63 percent as a result of a new labor agreement reached over the weekend, according to the pilots union.

The first-year increase will be followed by 4 percent pay raises in the second and third years of the contract, and recent hires called "B-scale" pilots will receive boosts in vacations and in company contributions to their pension funds that will put them at parity with more senior pilots, said an Allied Pilots Association spokesman.

American and the pilots have agreed to submit the toughest issue in their negotiations -- who pays for what portion of the pilots' health insurance -- to binding arbitration, but the union's board will vote this weekend on whether to ratify the rest of the package, said spokesman Bill Walters.

The tentative agreement at American followed months of tension at the carrier, which accused the pilots of calling in sick during the December holidays and causing hundreds of cancellations. The pilots have denied the accusation.

American now has "a major job on its hands to restore the trust and to return to a normal working relationship with its pilots," said Walters.

One fact that may have helped produce a settlement at American is negotiations between Northwest Airlines and its pilots.

Northwest yesterday said in a letter to employees that selling its Pacific routes or merging with another carrier were discussed with the pilots in a "view of the long term."