FRANKFURT (Reuters) - Lufthansa is ready to go into arbitration to resolve a long-running staff dispute, the CEO of Germany’s largest airline said on Thursday, as a walkout by flight attendants disrupted travel plans of tens of thousands of passengers.

Slideshow ( 6 images )

An end to the row over pay and pensions, and the legal status of flight attendants’ union UFO would relieve the company of a major headache.

Lufthansa faces intense competition from Ryanair and easyJet and has reacted by cutting costs and announcing a turnaround plan for its budget unit Eurowings, which it said on Thursday was paying off as it reported better-than-expected quarterly figures.

Shares in the Frankfurt-based group were up 8.5% at 1140 GMT.

“We are confident of finding a way to resolve legal questions by going into arbitration,” Lufthansa CEO Carsten Spohr said.

The airline and the union have been at odds for months over UFO’s legal status. Lufthansa says the union leadership that took office earlier this year was not elected in a way that met legal requirements - a stance that UFO contests.

UFO official Nicoley Baublies said his union was accepting the offer of weekend talks and would decide afterwards about formal arbitration talks.

“We will make this attempt. We don’t yet know whether it will be successful,” he said.

UFO for now will not prolong the two-day strike at Lufthansa’s core brand or extend it to other airlines within the group, the union said.

QUIET TERMINALS

Lufthansa on Wednesday said it expected to cancel a total of 1,300 flights on Thursday and Friday with 180,000 passengers affected.

Frankfurt, one of the airline largest hubs in Europe, was most affected by the walkout, with some 400 connections canceled on Thursday alone, the airline said.

The departure board on Frankfurt airport’s website showed canceled flights to Germany, Europe and the United States.

But there were no signs of chaos. “It’s quiet in the terminals,” a spokeswoman for the airport said, adding that many passengers had rebooked onto different flights and had not shown up.

The DAX-listed company this week unsuccessfully tried to challenge the walkout in court.

One day of strike action would cost the company an estimated 10 million to 20 million euros, CFO Ulrik Svensson said. Even rumors of a walkout would deter customers, he added.