Thomas Cook has agreed a 4% annual pay increase for its travel agents.

The deal comes as a welcome boost to the group’s agents following news of the planned merger with MyTravel that is expected to lead to major job losses as the retail network is trimmed.

The increase, which is expected to be officially announced to staff next week, is an improvement on last year’s 3% pay award, although marginally below inflation which currently stands at 4.2%, according to the Government’s retail price index.

Thomas Cook UK has enjoyed two consecutive years of record profits. Last month, it announced profits of £87.1 million for the 12 months to the end of October 2006, which was preceded by profits of £83.3 million the year before.

A Thomas Cook spokeswoman refused to confirm the award but admitted: “Thomas Cook is in the process of finalising its annual pay increase.”

Government figures released last year revealed travel agents are the 295th worst paid profession in the UK out of 350, earning £15,191 a year on average.

AA Appointments managing director John Tolmie said the average agent salary in London is around £17,000 and between £13,000 and £14,000 outside the capital.

“Pay increases in line with inflation are normally seen as the benchmark,” he said. “There is a great deal of unrest at Thomas Cook at the moment and the pay announcement will put a bit of sugar on a potentially bitter pill.”

Travel trade union Transport Salaried Staffs’ Association negotiated the deal on behalf of Thomas Cook agents.

TSSA travel negotiator Rick Justham confirmed the pay increase did not apply to MyTravel agents because the deal was agreed before the merger.

He said the deal was reasonable. “We hope this sets the standard for pay awards in the industry.”