FRANKFURT (REUTERS) - Germany's biggest airline Lufthansa has cancelled 35 flights on Sunday (Nov 28) as the fallout from a four-day strike by pilots over pay spilled into a fifth day.

The additional cancellations announced by the airline pushed the number of flights grounded since the walkout started on Wednesday to nearly 2,800, with more than 350,000 passengers affected.

"Almost all LH (Lufthansa) flights will operate according to schedule tomorrow. However, 35 flights cancelled due to the strikes on the preceding days," the company said via Twitter on Saturday.

A spokesman also denied an unsourced report in Frankfurter Allgemeine Zeitung that said the airline had considered going insolvent to rid itself of the costly labour agreement with its pilots, which lies at the heart of the conflict.

Late on Friday, Lufthansa's pilots union rejected the German airline's latest pay offer but lifted the immediate threat of extending their strike beyond Saturday.

"We need a negotiable offer. Otherwise there can always be additional strikes," Joerg Handwerg, board member at pilots union VC, told Reuters TV on Saturday.

Lufthansa had offered to increase wages by 4.4 per cent in two instalments, as well as a one-off payment equal to 1.8 months' pay.

The union wants an average annual pay increase of 3.7 per cent for 5,400 pilots in Germany over a five-year period backdated to 2012.