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Pilot strike grounds half of long-haul flights at Lufthansa

Planes of German flagship carrier Lufthansa are parked on tarmac at Munich's airport, December 1, 2014. REUTERS/Michael Dalder

FRANKFURT/BERLIN (Reuters) - Pilots at Lufthansa (LHAG.DE) started their second strike this week on Thursday, grounding about half of scheduled long-haul flights at the German flagship carrier, in a drawn-out dispute over an early retirement scheme.

Pilots' union Vereinigung Cockpit (VC), representing about 5,400 Lufthansa pilots, is fighting to retain a scheme allowing pilots to retire at age 55 and still receive up to 60 percent of their pay before regular pension payments start at 65.

Lufthansa says it will not accept a demand that new pilots, as well as those already with the company, should be able to retire at 55.

It offered VC mediation on Wednesday in hopes of resolving the dispute in time for the busy Christmas holiday season. VC board member Joerg Handwerg said VC would discuss the offer at a meeting of its pay committee at the start of next week.

The Germany-wide strike, the tenth this year, started at 02:00 GMT on Thursday and will run until 22:59 GMT. It forced Lufthansa to cancel 37 long-haul flights and six cargo flights.

Domestic and European routes, as well as flights of Lufthansa units Germanwings, Austrian Airlines and SWISS were not affected.

Pilot strikes have wiped 160 million euros ($200 million) off the airline's operating profit this year, not including this week's two walkouts.

Chief Executive Carsten Spohr said on Wednesday he saw no reason yet to change the group's target for operating profit of 1 billion euros in 2014 but did not give an estimate for the cost of this week's strikes.

Analysts currently forecast Lufthansa will make 2014 profit of 1.055 billion euros on average, according to Thomson Reuters data. Almost half raised their forecast after Lufthansa confirmed the target at its third-quarter results in October despite the cost of strikes.

Lufthansa's board on Wednesday approved plans to expand its low-cost operations as it battles to compete with budget carriers such as Ryanair (RYA.I) and easyJet (EZJ.L) and Gulf operators including Emirates, Etihad and Qatar.

While strikes usually receive widespread support from the German public, the pilots have come in for heavy criticism.

"In their cockpits, the pilots are in cloud cuckoo land," Ernst Elitz, a commentator for the large circulation daily Bild, wrote on Thursday. "For Lufthansa it's about surviving merciless competition. But the captains care only about their fat pensions and the dream of the good old days when there weren't any budget carriers."

(Reporting by Maria Sheahan and Victoria Bryan; Editing by Muralikumar Anantharaman and Vincent Baby)