Lufthansa planes are parked at Munich airport during a pilots' strike on Wednesday.

* Wednesday strike affects short haul

* Thursday strike to target long-haul, cargo

* Lufthansa cancels 42 long-haul flights

* Strike cost estimated at €15mn a day - analyst   

Reuters/Berlin

Lufthansa pilots began the first of two days of strike action on Wednesday in a long-running dispute over early retirement benefits and the carrier's cost-cutting plans which shows no sign of ending.

The German airline is trying to cut costs and expand budget operations as it tries to compete with low-cost carriers like Ryanair and easyJet in Europe and Gulf rivals such as Emirates.

But its attempts to renegotiate collective labour agreements, including retirement benefits, have been resisted by pilots at union Vereinigung Cockpit (VC) who staged 10 strikes last year.

Wednesday's strike, the second this year, affects short and medium-haul operations at Lufthansa's namesake brand and the carrier has cancelled 750 out of a scheduled 1,400 flights. Lufthansa cancelled 84 of its 153 long-haul flights planned for Thursday, but said it would be able to operate all cargo flights.

Equinet analyst Jochen Rothenbacher estimates the latest strikes are costing the carrier around 15mn euros a day in lost profit and said the dispute could last a long time.

"It's very very important for Lufthansa to bring their costs down to a level at which they can continue to compete. IAG has already done a good job of this" he said.

Lufthansa is not the only European carrier to have faced disputes with pilots over efforts to keep costs down - both Air France-KLM and Norwegian Air Shuttle have been hit by costly strikes in recent months.

Air France-KLM scaled back budget expansion plans after a walkout by its pilots last year.

Lufthansa Chief Executive Carsten Spohr has vowed to stay firm in the dispute and has said Lufthansa will increase fleet and staff numbers at its main passenger operations only if employees agree to concessions.

Spohr has said Lufthansa is getting better at coping with the strikes.

For example, unit Austrian Airlines is using larger aircraft to take Lufthansa passengers, while its Cologne-based Germanwings unit, also unaffected by Wednesday's strike, has taken on some Frankfurt flights.

A spokesman for union VC said it wanted Lufthansa to show more willingness to compromise. The pilots also want Lufthansa to agree to mediation covering early retirement benefits and other outstanding pay and cost-cutting issues, but the carrier has rejected this.

Lufthansa has called on VC to return to negotiations, but the union said no date had yet been set for talks.

Flights at Lufthansa brands Germanwings, Eurowings, Air Dolomiti, Swiss and Austrian are unaffected by the strikes.