Lufthansa pilots' strike wreaks havoc on flight schedule

Lufthansa pilots in Germany began a two-day strike on Wednesday, grounding some 1,800 flights at one of Europe's largest airlines in a long-running pay dispute.

The Vereinigung Cockpit (VC) pilots' union initially called a 24-hour walkout for Wednesday, but extended the strike for an extra day after two courts rejected attempts by Lufthansa to halt the industrial action.

Lufthansa, led by CEO Carsten Spohr, insists that despite a record profit in 2015, it has no choice but to cut costs to compete with leaner rivals such as Ryanair on short-haul and Emirates [EMIRA.UL] on long-haul flights.

Shares in the company have lost 12 percent of their value this year, but were up 1.2 percent at 1309 GMT (8:09 a.m. ET), outperforming German blue chips , which were down 0.5 percent.

Lufthansa canceled 876 of roughly 3,000 flights scheduled by its group airlines for Wednesday, and scrapped 912 flights for Thursday, affecting over 215,000 passengers in what is the 14th strike in the dispute since early 2014.

Lufthansa's CEO has said he expects the strike to cost between 7 million euros and 9 million euros ($7.4 million to $9.6 million) a day.

The strike started at midnight and affects flights departing from German airports, including 133 long-haul flights.

HOTELS FOR STRANDED

Flights by Lufthansa's other airlines, including Germanwings, Eurowings, Austrian Airlines, SWISS and Brussels Airlines, will not be affected, Lufthansa said.

Austrian and SWISS are using larger planes to carry passengers, while Lufthansa has reserved almost 4,000 hotel rooms in Frankfurt and Munich for stranded passengers.

Lufthansa has called on the pilots to enter mediation, which has been rejected by their union because it is first seeking a better offer from management as a basis for talks.

The union wants an average annual pay increase of 3.7 percent for 5,400 pilots in Germany over a five-year period from 2012. Lufthansa has offered 2.5 percent spread over the six years to 2019.

In its effort to reduce costs, Lufthansa has agreed deals on pay and retirement schemes with the main unions representing ground staff and cabin crew in Germany.

"It is incomprehensible that the union is calling for the biggest pay increase for the most well-paid group of staff," Lufthansa board member Bettina Volkens said in a statement.

(Editing by David Goodman and Alexander Smith)