By Maria Sheahan and Victoria Bryan
FRANKFURT/BERLIN (Reuters) - Lufthansa (DE:LHAG) has canceled 750 flights or about half the total due to a strike planned by pilots for Wednesday, affecting thousands of passengers in a long-running dispute over early retirement benefits and plans to expand budget flights.
The German airline is trying to cut costs and renegotiate expensive labor agreements as it tries to compete with low-cost carriers and rivals such as Emirates and Turkish Airlines, but its efforts have been resisted by pilots who staged 10 strikes last year.
Pilot's Union Vereinigung Cockpit (VC) said late on Monday the strike, its second of 2015, would focus on short- and medium-haul flights. It said Lufthansa's management remained undeterred in its efforts to offer less attractive working conditions for younger pilots.
Lufthansa's namesake brand had planned to operate around 1,400 flights on Wednesday and the strike will affect 80,000 passengers, a spokesman said.
Lufthansa, which has said any growth at its main brands was dependent on cost cuts, in response called off a separate round of pay talks with VC scheduled for Tuesday.
CEO Carsten Spohr has promised to stay firm in the row with pilots. Rival Air France-KLM (PA:AIRF) has scaled back budget expansion plans after a strike by its pilots last year.
Strikes by pilots and security staff cost Lufthansa 232 million euros ($246 million) in 2014. Last week, it forecast an increase in core earnings this year but said the forecast did not include the cost of any further strikes.
Speaking on the sidelines of an aviation summit in Washington on Tuesday, Spohr said Lufthansa was getting better at coping with the strikes and he therefore expected their impact on operations to lessen as time goes on.
The pilots have called for mediation to resolve outstanding issues, including the issue of reducing costs on long-haul flights to tourist destinations and pay.
Lufthansa has said it wants mediation only on the issue of early retirement benefits, which currently enable pilots to retire at 55 and receive a portion of their salary until the state pension age of 65.
Lufthansa has said it will leave that agreement in place for those starting at the company before 2014 but wants to increase the average age of retirement to 61 years of age. It says the current average age of retirement for its pilots is 59.5 years.
Flights at Lufthansa brands Germanwings, Eurowings, Air Dolomiti, Swiss and Austrian will be unaffected by the planned strike, as will long-haul routes.
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