Lufthansa passengers faced chaos on Monday after the airline cancelled virtually all of its flights in Germany due to a strike by staff over pay.

"With the start of today's shift, a strike at all large airports has begun," Martina Soennichsen, a spokeswoman for German trade union Verdi said on Monday.

In Frankfurt alone, 2,000 Lufthansa employees started industrial action beginning at 0300 GMT.

Overall, around 1,700 flights will be cancelled, Lufthansa said.

That leaves just 20 of its regular European short-haul flights running and only a handful of long-haul flights out of Frankfurt, Munich and Duesseldorf. The strikes will cost the airline tens of millions of euros.

Verdi, which represents 33,000 workers, is asking for a 5.2 percent pay rise and job guarantees.

Lufthansa made a new offer last week to raise salaries by 1.2 percent from October this year and a further 0.5 percent a year later, in a deal that would run for 29 months and would not contain job guarantees.

Verdi dismissed the offer as "scandalous".

(Reporting By Ralf Banser and Vicky Bryan; Writing by Edward Taylor; Editing by Mark Potter)