Lufthansa wants to expand European operations

Under the accord, which followed three days of talks, the 37,000 workers will receive two one-off payments, plus profit sharing.

In March 2005 they will receive a sum equal to 0.5% of their salary, and then 1.6% a year later.

Lufthansa also agreed to give the ground staff two-year job guarantees.

'Stability'

In return the workers will have to accept more flexibility over working hours, and reduced over time payments.

Lufthansa said it will enable it to lower ground staff costs by 150m euros ($199.8m; �103m) over two years.

"The two-year duration (of the deal) gives us planning certainty and stability for personnel costs," said Lufthansa staff chief Stefan Lauer, who has been leading the talks for the airline.

Lufthansa is holding separate talks with unions regarding its 14,000 strong cabin crew.