Southwest Airlines' pilots union has reached an agreement in principal with the pilots union for AirTran Airways, the low-cost airline it bought in May.

Southwest said in a statement released on Saturday that its pilots union and AirTran Airways pilots union had agreed to integrate its seniority lists for pilots and avoid an arbitration process.

The boards of both unions still need to approve the deal before it can go through.

Southwest Airlines completed its acquisition of AirTran Holdings for about $1 billion in May, positioning itself to challenge bigger carriers in big U.S. East Coast markets while eliminating a major low-cost rival.

(Reporting by Liana B. Baker, Editing by Maureen Bavdek)