• Flight attendants’ pay will rise 3 percent through 2019
  • Contract reduces employee costs by 10 percent per hour

Deutsche Lufthansa AG secured cost cuts from flight attendants in a deal that resolves a long-running dispute over pay and retirement and puts an end to strikes in coming years.

The deal with the flight attendants union UFO will reduce cabin-crew costs per hour at Lufthansa’s namesake brand by about 10 percent, with the bulk of those savings coming from pension-plan changes, the airline and labor leaders said Tuesday. The carrier won’t fire flight attendants through 2021 should it need to reduce the workforce.

UFO and the pilots union Vereinigung Cockpit have held strikes in the past two years as disputes over pay, benefits and retirement were exacerbated by concerns about Lufthansa’s strategy for converting its Eurowings unit into a low-cost division. Lufthansa is still in talks with pilots, targeting an accord by the end of the month. UFO and the airline said Tuesday that they’ll seek to agree on a contract for Eurowings cabin crews by the end of September.

"The agreement with UFO is an important milestone toward securing our future viability,” Bettina Volkens, Lufthansa’s human-relations chief, said Tuesday at a Berlin press conference.

Chief Executive Officer Carsten Spohr reiterated on Monday that the German company still expects earnings growth in 2016 as lower spending on fuel helps make up for weakening growth in air travel. He’s been pushing for employees to agree to concessions on wages and benefits to maintain profit.

The three-year contract raises flight attendants’ pay by 1 percent in October and another 2 percent in January 2018, while their retirement plan shifts to a defined-contribution program from defined benefits. That comes on top of a 2.2 percent wage increase for most of 2016, plus a 3,000-euro ($3,300) one-time payment that UFO agreed to in January. Employees will vote by Aug. 10 on the deal, which preserves flight attendants’ right to retire at age 55 while revising terms for starting pay.

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