The UFO union, which represents more than 10,000 flight attendants and pursers in Germany, said on Friday it had rejected Lufthansa's latest offer but expected the airline to make a new proposal by the middle of next week.

UFO chief negotiator Dirk Vogelsang told journalists that a strike seemed increasingly likely.

The strike threat comes as Lufthansa cuts 3,500 jobs - about 3 percent of its global workforce of 117,000 - and freezes investment to boost profit squeezed by soaring fuel prices and fierce competition from low-cost and Middle East carriers. {ID:nL6E8J22PJ]

Lufthansa (LHAG.DE) has also shifted contracts of pilots and flight attendants at carrier Austrian Airlines to a lower-cost subsidiary and boosted cooperation between its main Lufthansa brand and low-cost carrier Germanwings.

UFO is pushing for higher pay after three years without an increase and a pledge by Lufthansa not to staff flights with temporary workers.

The union's head Nicoley Baublies would not say what form a strike could take but that even just stopping work for a few hours could have knock-on effects for days.

"There are economic difficulties yes, but while they are paying out a dividend, they are clearly not a restructuring case," Baublies said, adding that the union had offered "painful" concessions, such as fewer days off.

Flight attendants backed industrial action in a vote earlier this month but UFO said it would delay a decision on a strike until Lufthansa had presented its new offer.

The union had hit back at plans by Lufthansa to hire temporary staff as flight attendants on its routes from Berlin, but a German court backed the airline earlier this year. (Reporting by Victoria Bryan and Peter Maushagen)

• A Permanent Economic Emergency