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Pilots ramp up pressure on Lufthansa with Friday strike threat

By Victoria Bryan and Peter Maushagen

FRANKFURT/BERLIN (Reuters) - Pilots at Lufthansa's budget carrier said they would walk off the job on Friday if an agreement on an early retirement scheme is not reached, upping the pressure on the airline's management for talks planned on Thursday.

Like their colleagues in other Lufthansa units, the pilots at low-cost carrier Germanwings want the management to maintain the scheme that allows them to retire early at 55 and still keep some of their pay until they reach the age at which state pension payments start. [ID:nL5N0QW4F3]

Lufthansa and pilots' union Vereinigung Cockpit (VC), which represents around 5,400 pilots at the airline, are due to return to the negotiating table later on Thursday. If talks fail to lead to an agreement, pilots at Germanwings will go on strike for six hours from 0400 GMT on Friday, VC said.

About 700 of the Lufthansa group's over 9,000 pilots work at Germanwings.

A spokeswoman for Lufthansa said the airline was looking into what impact Thursday's announcement would have on the talks with the union.

Pilots at Lufthansa held a three-day nationwide strike in April which grounded almost all the company's flights and wiped off 60 million euros ($79 million) from its first-half profits.

However the action was widely condemned across Germany as people criticized the demands of what many regard as a highly-paid group of workers. The pilot's union had said this week any subsequent strike was likely to be smaller, and for only a few hours at a time. [ID:nL5N0MV3L8]

Germanwings, which operates European short-haul flights outside of Lufthansa's Frankfurt and Munich hubs with a fleet of 52 aircraft, has 164 flights scheduled for the strike period and said it was working on a plan for the possible strike.

Shares in Lufthansa were down 1.1 percent at 0910 GMT, among the top fallers on Germany's Dax index <.GDAXI>. Fears of a widespread strike had hurt Lufthansa shares earlier this week.

Bankhaus Metzler analyst Juergen Pieper said the six-hour walkout could mean a hit of around 2-3 million euros to operating profit, and that this strike, at least, would not endanger the company's aim to make profit of around 1 billion euros this year.

RAIL STRIKE TOO?

News of the strike comes as travelers in Germany, many of whom are returning from summer holidays, also face a possible walkout by employees at rail operator Deutsche Bahn, though VC has said it was in touch with the rail union to avoid entirely shutting down domestic transportation routes.

During previous strikes, Lufthansa has rebooked passengers on domestic German flights onto trains instead.

The early retirement scheme was introduced more than 50 years ago because pilots could not work beyond the age of 55 and so were left with a gap of up to eight years before they could draw a pension. The scheme provided for them to receive 60 percent of their wages during the interim years.

Lufthansa wants to scrap the scheme and increase the early retirement age to 61 now that a European court has ruled pilots may work up until the age of 65. The airline initially canceled it with effect from the start of 2014 but now says it will remain in place until 2016 to allow time for negotiations.

Lufthansa has been overhauling its business to boost group operating profit to 2.3 billion euros ($3 billion) by 2015, up by 1.5 billion compared with 2011, and compete with budget airlines and Gulf carriers.

It says the negotiations on the early retirement scheme do not form part of the SCORE cost-cutting program.

Lufthansa is in the process of transferring much of its European short-haul business to Germanwings, except for flights to and from its hubs in Frankfurt and Munich.

However, it says costs at Germanwings, around 20 percent below that of Lufthansa, are still too high. The group is therefore planning to expand the use of its smaller Eurowings budget brand, where costs are 20 percent below Germanwings, and is considering setting up a new low-cost long-haul business.

($1 = 0.7567 euro)

(Additional reporting by Maria Sheahan and Hans Seidenstuecker; Editing by Pravin Char)

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