Germany's Lufthansa airline and a union representing its cabin crew have reached a three-year wage deal to end a lengthy labor dispute following arbitration.

The airline and the UFO union formally accepted Tuesday a proposal by arbitrator Matthias Platzeck, a former state governor, which foresees a 1 percent pay increase in October followed by another 2 percent in January 2018.

Lufthansa also agreed that no cabin employees will be laid off for five years and that its planes won't be operated with external cabin staff before 2023. The airline secured changes to the staff's pension system, which it said allow it to lower costs.

The UFO union had staged multiple strikes to press its demands for its 19,000 members before both sides agreed in January to arbitration.