Air France-KLM CEO Jean-Marc Janaillac praised the pilots' “spirit of responsibility” after they agreed to the creation of a cheaper medium- and long-haul service on condition they would receive the same pay and conditions.
The hiring of stewards, hostesses and part of the ground personnel for the new Boost service will, by contrast, be outsourced.
Janaillac said the agreement was a “balanced compromise that serves the interest of the company and all its employees.”
The company will begin offering the lower-cost medium-range flights in the autumn and follow up with a new long-range service in mid-2018.
The pilots were initially hostile to the plan, fearing they would be forced to accept lower wages.
In September 2014, they striked for two weeks over the expansion of Air France's low-cost European subsidiary Transavia, grounding thousands of flights.
Monday's accord ends seven months of negotiations on a new cost-cutting deal.
The pilots agreed to forfeit a day of rest on medium-range flights and to give up their private toilets on the A330 and A350 airliners, in order to create space for more passengers.
Air France for its part agreed to limit the number of planes that would be operated by the new service to 18 medium-haul and 10 long-haul aircraft.