Jetstar has agreed to reinstate whistleblower pilot Joe Eakins, who was sacked last month after airing his concerns about falling safety standards.
The pilots union praised the move as a victory for common sense.
Mr Eakins was fired from the budget airliner in late November after speaking out about a range of cost-cutting measures which he believed compromised safety.
It included the push towards using foreign-based cabin staff.
Mr Eakins had been pursuing legal action, but the Australian and International Pilots Association said Jetstar was giving Mr Eakins back his job in an otherwise confidential out-of-court settlement.
The association's president Barry Jackson welcomed the move, particularly so close to Christmas.
"Jetstar management have pulled back from the brink and that is a good, common sense outcome," Mr Jackson said in a statement.
"(It) means a young pilot's career has not been trashed and Joe can go back to doing what he loves."
In an issued statement, Mr Eakins apologised to his employer.
"I never intended my comments to bring into question the sound and proactive safety culture that exists within Jetstar," the statement read, as published in News Ltd newspapers.
"I apologise for any inference that might have been drawn from my comments that I was questioning Jetstar's safety culture because that was certainly not my intention".
Backed by the union, Mr Eakins, 31, from Sydney's north shore, had been claiming unfair dismissal with the national workplace umpire, Fair Work Australia.
The union had raised more than $40,000 through a public appeal, and received about 650 signatures in a petition demanding his reinstatement.
Mr Jackson said Mr Eakins had the full backing of his pilot colleagues, who were up-in-arms about "such extraordinary, punitive action by the (Jetstar) management team".
The union said it had been very confident of its legal bid.
Mr Jackson said he looked forward to the findings of a Senate inquiry examining pilot training, and potentially introducing stronger whistleblower protections.
- AAP
Whistleblower Jetstar pilot gets job back
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