More than 800 flights grounded as Lufthansa dispute intensifies

BERLIN (Reuters) - German airline Lufthansa cancelled around 830 flights on Friday because of a strike by pilots, with long-haul journeys facing disruption over the weekend as the dispute intensifies.

Shares in Lufthansa, down more than 13 percent this year, traded lower on Friday as investors fretted over the prospect of a long-running walkout at the German airline with neither pilots nor management appearing willing to back down.

One of Europe's biggest airlines, Lufthansa has cancelled over 2,600 flights since pilots represented by the Vereinigung Cockpit (VC) union went on strike on Wednesday, disrupting travel plans for more than 315,000 passengers.

The union raised the pressure on management and extended the strike for a third time on Thursday, saying all long-haul flights leaving Germany on Saturday will be affected until midnight. The strike on Friday was affecting short and medium-haul flights.

The pilots' strike is their 14th walkout since early 2014. 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 over six years to 2019.

Lufthansa Chief Executive Carsten Spohr has said the carrier's future would be on the line if pilots' wages were raised to the level demanded.

Lufthansa 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 routes and Emirates on long-haul flights.

Lufthansa has put the cost of the stoppage at around 10 million euros ($11 million) per day.

However, the airline could take a longer-term hit if the strike prompts customers to shun Lufthansa and switch to rival airlines. Board member Harry Hohmeister said on Thursday the walkout was hitting mid-term bookings.

Lufthansa shares traded 0.8 percent lower at 12.54 euros by 0900 GMT.

The airline has urged the union to enter mediation, but the union said it wants to see a better offer first.

It has already agreed deals with the main unions representing ground staff and cabin crew in Germany, leaving an agreement with its pilots outstanding.

($1 = 0.9437 euros)

(Reporting by Caroline Copley; Editing by Keith Weir)