Lufthansa Passenger Airlines executive Peter Gerber told journalists on Wednesday he saw mediation as a "less than ideal solution", as it would take a third-party mediator too long to understand the complexities of Lufthansa's pay structure.

Talks between Lufthansa (LHAG.DE) and trade union UFO broke down a week ago, having failed to result in an agreement for 13 months, and have so far not resumed, with both sides adamant the other should make concessions first.

UFO, which represents around two-thirds of Lufthansa's 18,000 flight attendants, is demanding a 5 percent pay increase and guarantees that jobs will not be outsourced to temporary workers, while Lufthansa has offered a pay increase of 3.5 percent in exchange for longer hours.

The union has threatened to hold a 24-hour strike across Germany on Friday if Lufthansa does not agree to mediation, after a second day of rolling strikes lasting up to 11 hours on Tuesday already resulted in the cancellation of over 350 flights and left 43,000 passengers stranded.

Some analysts have estimated that such widespread industrial action could cost Lufthansa as much as 50 million euros per day, though the hit could be limited by re-booking passengers on its other carriers like Swiss and Austrian Airlines and by leasing aircraft complete with crew.

Lufthansa is under pressure not to give in to UFO's demands as it tries to sharply cut costs as part of a plan to improve annual earnings by 1.5 billion euros by 2014.

Lufthansa said it expects the strike on Friday to ground no more than two thirds of its 1,800 daily flights and said it would publish a flight schedule for the day later on Wednesday.

UFO is meanwhile continuing to prepare for Friday's planned walkout, with union chief Nicoley Baublies saying Lufthansa had not yet been in touch with him. "Gerber should call me and say: I want a mediation," Baublies said.

In Germany, when two sides agree to a mediation, neither must take strike action for the duration of the process.

Lufthansa's Gerber said that Lufthansa would only agree to mediation if it was restricted to matters of pay and did not include other issues like the use of temporary workers. (Editing by David Holmes and Tim Dobbyn)

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