The new offer made to pilots on Friday included a 2.4 percent pay rise in 2016, going up by a further two percent to reach 4.4 percent in 2017. A one-off payment equivalent to nearly two months' wages was also on offer. 

As part of the offer a thousand new, junior pilots were also to be hired.

But late Friday, the pilots' Cockpit union rejected the offer, describing it as an attempt to "sell old wine under a new label," according to Joerg Handwerg, a member of the union's management. However, he said there were no plans to continue the strike after Saturday, although new action could be taken later.

The latest dispute began on Wednesday and has seen some 2,600 planes grounded, affecting more than 315,000 passengers.

Lufthansa said it would cancel a further 137 flights on Saturday - representing some 5 percent of its schedule - including 88 intercontinental flights. Short- and medium-haul flights would also be affected, the airline said.

New offer from airline

VC has called for an average annual pay increase of 3.7 percent for the past five years - with the difference to be paid retroactively - for its 5,400 pilots. Lufthansa had been offering 2.5 percent over six years to 2019.

Lufthansa chief executive Carsten Spohr has said the future of Germany's national carrier would be at stake if it were to give in to the pilots' demands. The airline maintains that, despite record profits, it must cut costs so as to compete with rivals such as Ryanair - particularly on short-haul routes.

Lufthansa says the cost of the stoppage is about 10 million euros ($11 million) per day. While the initial damage is short-term, there are signs that the airline could take a longer-term hit, with customers increasingly wary of making bookings. The latest pilots' walkout is the 14th since early 2014.

Lufthansa board member Harry Hohmeister on Thursday said the walkout was hitting mid-term bookings.

rc/kl,jm (dpa, AFP,  AP, Reuters)