Lufthansa's budget airlines Eurowings and Germanwings have reached an agreement in principle on wages and retirement benefits with German cabin crew union UFO, Eurowings said on Sunday.

The outline deal, reached over the weekend, could end a three-year dispute which forced the cancellation of around 400 flights last October, after cabin crew at budget airlines Eurowings and Germanwings staged a strike.

The collective wage agreement includes wage levels, profit participation and a pension deal for around 1,400 staff, Eurowings said in a press release on Sunday.

The agreement needs to be formally approved and voted on by UFO's management and Lufthansa Group's senior management.