Lufthansa pilots extend strike, hundreds of flights cancelled

* Wednesday strike affects short haul,

* Thursday strike to target long haul, cargo

* Lufthansa cancels 42 long-haul flights

* Friday strike to hit short and medium haul

* Strike cost estimated at 15 mln euros a day -analyst (Adds pilots' union VC calling strike for Friday)

By Victoria Bryan

BERLIN, March 18 (Reuters) - Lufthansa pilots on Wednesday announced a third consecutive day of strikes this week, forcing hundreds of flight cancellations and ramping up pressure on management in a long-running row over early retirement benefits.

The German airline is trying to cut costs and expand budget operations as it competes with low-cost carriers like Ryanair and easyJet in Europe and Gulf rivals such as Emirates.

But its attempts to renegotiate collective labour agreements, including retirement benefits, have been resisted by pilots at union Vereinigung Cockpit (VC) who staged 10 strikes last year.

The union already staged a strike on short and medium-haul flights on Wednesday and plans a long-haul strike on Thursday. It said late on Wednesday it was calling for a walkout on Lufthansa short and medium-haul flights all day on Friday.

Wednesday's strike, the second this year, also targeted short and medium-haul operations at Lufthansa's namesake brand, with the carrier cancelling 750 of a scheduled 1,400 flights. Lufthansa cancelled 84 of its 153 long-haul flights planned for Thursday, but said it would operate all cargo flights.

VC stressed it did not seek to block the company's strategic decisions, only set contract terms for pilots.

"Competition must not lead to a sell-out of the values that have helped make Lufthansa one of the world's leading airlines," VC spokesman Joerg Handwerg said in a statement.

Lufthansa in response asked pilots to return to the negotiating table.

Lufthansa units Germanwings and Eurowings would not be affected by the Friday strike, the union said.

Equinet analyst Jochen Rothenbacher estimates the latest strikes are costing the carrier around 15 million euros a day in lost profit and said the dispute could last a long time.

"It's very very important for Lufthansa to bring their costs down to a level at which they can continue to compete. IAG has already done a good job of this," he said.

Lufthansa is not the only European carrier to have faced disputes with pilots over containing costs - both Air France-KLM (Other OTC: AFLYY - news) and Norwegian Air Shuttle have been hit by costly strikes in recent months.

Air France-KLM scaled back budget expansion plans after a walkout by its pilots last year.

Lufthansa Chief Executive Carsten Spohr has vowed to stay firm in the dispute and has said Lufthansa will increase fleet and staff numbers at its main passenger operations only if employees agree to concessions. (Additional reporting by Jan Schwartz and Jonathan Gould; Editing by Pravin Char, David Evans and Gunna Dickson)