By Victoria Bryan
BERLIN (Reuters) - Pilots at Lufthansa's
Pilots' union Vereinigung Cockpit (VC) wants Lufthansa to maintain an early retirement scheme that allows pilots to retire at 55 and still receive up to 60 percent of their pay until state pension payments kick in.
The airline argues that there is no need for the scheme, given rising life expectancy and a court ruling that pilots can now work until the age of 65.
The dispute is set against the backdrop of a Lufthansa overhaul to boost competitiveness against no-frills rivals and Gulf carriers, seeking to lift annual group operating profit to 2 billion euros in 2015, up from its forecast 1 billion in 2014.
A three-day nationwide strike by Lufthansa pilots in April over the same issue effectively grounded the airline and wiped 60 million euros ($79.04 million) off its first-half profit.
VC, which represents about 5,400 pilots across the Lufthansa group, said it could not rule out further action over the weekend or the coming week, but that it would give a day's notice of any strike.
"We can't rule out that it may come to strikes at Lufthansa and Lufthansa Cargo," spokesman Markus Wahl told Reuters TV, referring to Lufthansa's flagship brand and its freight unit.
Lufthansa shares were down 1.7 percent at 1059 GMT, the biggest faller on a 0.3 percent stronger DAX <.GDAXI>, hit by the dispute and concerns a volcano eruption in Iceland could affect aviation.
"It seems as though this dispute could last a relatively long time, because the pilots are not showing any signs of being ready to compromise," said Bankhaus Metzler analyst Juergen Pieper.
About 700 of the Lufthansa group's more than 9,000 pilots work at Germanwings, which mostly operates short-haul flights from smaller German airports and not Lufthansa's main Frankfurt and Munich hubs.
Germanwings cancelled 116 flights on Friday - equivalent to 70 percent of its scheduled flights for the strike period, 0400 GMT (0000 EDT) to 1000 GMT (6000 EDT).
The nationwide strike in April drew ire from the German public, as people criticised the demands of what many regard as a highly paid group of workers, and the latest action has renewed calls for the government to take action against unions representing smaller groups of workers.
The Germanwings walkout is the fourth strike to affect Lufthansa's operations in 2014. Earlier this year, security staff and public-sector workers chose to strike at Frankfurt airport, disrupting travel and bringing chaos to the Europe's third-largest airport.
The pilots are also in discussions with Lufthansa over pay increases, although they say the pension scheme rather than pay is the main reason for the strikes.
Columnist Franz Joseph Wagner at best-selling German daily Bild on Friday described the action by the pilots as "crazy". In his regular column he wrote: "I got it wrong with you pilots. I thought it was flying that was important, not the money."
Lufthansa, which says there needs to be rules in place to protect companies where many different unions are active, urged the pilots to return to the negotiating table.
"We've made concrete offers. It's up to VC now," a spokesman said.
Airports served by Germanwings, such as Cologne-Bonn and Berlin Tegel, were mainly quiet on Friday morning, with many passengers having rebooked or cancelled.
At Berlin Tegel, a flight to Milan Linate was among the cancellations. The Bernasconi family were originally booked to Linate, but are now having to make a stop in Munich before going to Milan's other airport, Malpensa.
"We expect this in Italy, but not in Germany," they said as they rebooked their tickets.
($1 = 0.7591 euro)
(Additional reporting by Reuters TV and Ralf Banser; Editing by David Goodman and Pravin Char)