Lufthansa, Germany's largest airline, and services union Verdi said Friday they had agreed a pay deal to end a five-day strike by ground and cabin staff.

The strike, which has resulted in the cancellation of hundreds of flights since it began early Monday, is to end with the early shift on Saturday.

Lufthansa, which said earlier it was cutting 128 flights from its regular Friday schedule, said the cancellations would continue into the weekend, as many aircraft in its fleet of 520 had not undergone the necessary maintenance.

Some knock-on effects from the strike, in which around 5,000 workers participated on each day, could last for two weeks, the airline said.

The deal, which covers 21 months to the end of February 2010, provides for a phased pay rise of 7.4 per cent for 50,000 workers. It also includes one-off payments.

Lufthansa spokesman Stefan Lauer said the deal would be "painful" for the company, costing around 100 million euros (156 million dollars) in its second year.

Verdi had demanded 9.8 per cent more pay over a 12-month contract for 50,000 workers.

Lufthansa faces the possibility of another dispute when a deal with the Independent flight attendant organization (UFO) expires at the end of this year.

UFO, which represents 14,000 cabin staff, has indicated it will seek a 15-per-cent pay rise, although air travel experts expressed scepticism about whether its members would be willing to embark on a strike following the deal concluded with Verdi.

Lufthansa's budget subsidiaries, Eurowings and Cityline, continue to face a dispute with pilots organized in the Cockpit union.

After two strikes last month, lasting 24 and 36 hours respectively, Cockpit is considering the latest offer from the airline.