FRANKFURT • Germany's flagship carrier Lufthansa cancelled nearly 900 flights because of a two-day strike by pilots, causing travel disruption for tens of thousands of passengers in the latest escalation of a long-simmering pay dispute.

The Vereinigung Cockpit (VC) pilots' union initially called a 24-hour walkout for yesterday but extended the strike for an extra day after two courts rejected attempts by Lufthansa to halt the industrial action.

Lufthansa management, led by CEO Carsten Spohr, has refused to budge from its insistence that, despite record profit last year, the airline has no choice but to reduce costs if it wants to compete with leaner rivals such as Ryanair on short-haul flights and Emirates on long-haul routes.

Out of its 3,000 scheduled flights leaving Germany, 876 were cancelled, "affecting some 100,000 passengers", the airline said.

In Singapore, Flight LH778, scheduled to arrive from Frankfurt this afternoon, and Flight LH779, which was slated to leave for Frankfurt shortly before midnight, have been cancelled.

It is the union's 14th strike since April 2014.

Meanwhile, a separate walkout by cabin crew at Lufthansa's low-cost airline Eurowings led to the cancellation of more than 60 flights at airports in Hamburg and Duesseldorf on Tuesday.

Lufthansa group's other airlines - Germanwings, Swiss, Austrian Airlines, Air Dolomiti and Brussels Airlines - are not affected by the strike.

The industrial action was called by Germany's biggest services union, Verdi, in a row over pay and working conditions. The pilots are demanding a pay rise of an average of 3.66 per cent a year, retroactive for the past five years.

The union says pilots have endured a wage freeze over that time and suffered a "significant loss of purchasing power" due to inflation, while Lufthansa has made billions in profits.

It had offered a 2.5 per cent wage hike.

AGENCE FRANCE-PRESSE, REUTERS