Sweden's Volvo Group on Tuesday cancelled 335 planned layoffs after a deal with trade unions to reduce working hours and salaries instead, following a similar deal last month that saved 600 jobs.

The Swedish company, which makes trucks, buses and construction equipment, issued a notice to just over 1,500 employees on April 22, saying they would lose their jobs owing to the collapse in global demand for its products.

But the company on Tuesday said it had agreed with the IF Metall union to cut salaries by up to four percent and working hours by 10 percent at one of its plants, enabling it to cancel 335 of the planned layoffs.

Volvo struck a similar deal in May that cancelled a further 600 layoffs.

The announcement came the same day as Volvo Aero, a subsidiary that develops and manufactures components for aircraft and rocket engines, issued notices of termination of employment to 160 salaried employees in Trollhättan due to lower demand.

“Our volumes are decreasing, both in production and product development, while at the same time we need to manage our cost situation,” said Staffan Zackrisson, President of Volvo Aero.