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Lufthansa flight attendants strike at 3 airports

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BERLIN — Lufthansa flight attendants escalated their bitter pay dispute on Tuesday, going out on strike at three German airports — including the two biggest, Frankfurt and Munich — in a showdown with an airline determined to bring down costs.

Lufthansa scrapped around 300 flights Tuesday. Most of the cancelled services were on short- and medium-haul routes but about a third of intercontinental flights — including services to and from Los Angeles, Houston, Chicago, Beijing and Mexico City — were also axed.

The flight attendants' UFO union called on Berlin-based members to walk out for eight hours starting at 5 a.m. (0300 GMT), and their counterparts at Frankfurt, Germany's busiest airport and Lufthansa's main hub, to follow at 6 a.m. (0400 GMT).

UFO also planned to hit Germany's second-busiest airport, Munich, with an 11-hour walkout starting at 1 p.m. (1100 GMT).

The union opened its strike campaign last Friday with an eight-hour walkout in Frankfurt and warned of more to come if Lufthansa didn't give ground. It has given only a few hours' notice of where and when it plans to strike.

UFO is seeking a 5 percent pay raise for the airline's more than 18,000 cabin crew workers after they did without increases in recent years. Lufthansa has said it is offering a 3.5 percent raise, and is calling for a slight increase in working hours.

The union objects to what it says would be only gradual increases and lower wages for new employees.

The airline and the union also have been at odds over issues such as the possibility of Lufthansa transferring flight attendants to its partner budget airlines with cheaper contracts as part of a cost-saving program, though the walkouts are focused squarely on the pay issue.

"I have the impression both parties want to take it out on the back of the passengers to show their power, and it's a shame, because it is not our fault if employer and employees cannot agree," Olaf Terbeznik, a 38-year-old IT project manager from Berlin, said at the capital's Tegel airport.

Lufthansa is trying to cut costs amid tough competition from budget carriers in Europe and from aggressively expanding government-owned Gulf airlines. Their rise has hurt traditional big airlines such as Lufthansa.

The airline blamed high fuel costs and new taxes on air travel in Germany and Austria for a 24 percent decline in second-quarter earnings compared with a year earlier to €229 million ($288 million). Lufthansa announced in May that it will shed 3,500 office jobs over the coming years to cut costs and boost lagging profits.

The cuts are part of a cost-reduction program that started at the beginning of the year and aims to improve the company's operating profit by €1.5 billion compared to 2011 by the end of 2014.

Both UFO, one of several single-profession unions in Germany that tend to be more militant than the country's traditional large umbrella unions and have caused disruption over recent years, and the airline appear in uncompromising mood.

The chairman of Lufthansa's board of directors, Juergen Weber, was quoted last month as telling the weekly Die Zeit: "It is better to let it come to a big bang before the company catapults itself out of competition."

Lufthansa spokesman Klaus Walther said that "it is time for basic pay to be improved, but we must also (adapt) to changed conditions."

Things have changed over the past five to 10 years, Walther told ZDF television. "The competition situation is completely different and the economic situation is completely different too."

Airlines such as Lufthansa generate a good share of their business by carrying partner airlines' passengers to onward destinations. However, three big government-owned Gulf carriers — Emirates, Qatar Airways and Etihad Airways — have all expanded aggressively, particularly in Europe, to eat in other airlines' long-haul traffic. So rather than transferring in Germany with Lufthansa, passengers from North America or Europe heading to Asia, Africa and Australia are increasingly transiting through the Gulf's gleaming airports.

The Gulf's fast-growing fleets are filled with some of the industry's newest planes, and usually boast generous in-flight meals and entertainment. Dubai-based Emirates has grown into the world's largest carrier if measured in terms of international passenger traffic. It last fiscal year pulled in $629 million in profit despite a big jump in fuel costs.

Abu Dhabi-based Etihad, which only started operations in 2003, posted its first annual profit of $14 million last year. Qatar Airways doesn't disclose its finances.

All three carriers insist they operate on purely commercial terms and do not receive perks such as discounted jet fuel. None of them has a unionized work force, however, so they do not have to contend with strikes.

Etihad late last year when it bought nearly 30 percent of Germany's second-biggest carrier, Air Berlin PLC. It has since amassed stakes in three additional carriers and partnered with others elsewhere.

Dorothee Thiesing in Berlin and Business Writer Adam Schreck in Dubai, United Arab Emirates contributed to this report.