Germany's Lufthansa and the union representing its cabin crew say they've agreed to arbitration in a long and bitter labor dispute that has cost the airline millions.

The UFO union has staged multiple strikes to press its demands, including transition payments for its 19,000 members if they retire early. The contract dispute comes as Lufthansa is trying to cut costs amid rising competition from Gulf state airlines.

The airline, Germany's largest, said Friday that both sides have agreed to arbitration and that talks already began on Tuesday. They're to continue until June 30 and no strikes will be permitted while they're ongoing.

Lufthansa says the sides agreed going in on a wage settlement good through September that includes a 2.2 percent pay increase and single payments of 3,000 euros ($3,250).