EASYJET PLC 
HAMBURG (Reuters) - Lufthansa (>> Deutsche Lufthansa AG) will offer pilots mediation on a wide range of outstanding pay issues, the company said on Wednesday, as it seeks to end a long-running dispute over pay and expansion of budget services that has resulted in dozens of costly strikes.
Chief Executive Carsten Spohr also reiterated Lufthansa's operating profit target of more than 1.5 billion euros (£1.07 billion) this year, boosting the company's shares by 2 percent to be the top gainer on the DAX index <.GDAXI>.
"We are reaching out," Spohr told shareholders at the company's annual general meeting, which began with a minute's silence for the victims of the Germanwings plane crash at the end of March.
"The crash has changed us and the scars it has left on our company will remain for ever," he added.
Pilots' union Vereinigung Cockpit has held 15 strikes since last April, costing the company more than 200 million euros in lost operating profit in 2014.
Spohr said that strikes in February and March had resulted in 42 million euros of lost profit in the first quarter and were likely to cost 58 million euros in second-quarter bookings.
He also said that the market environment remains challenging.
"It has not got any easier after the first quarter," he said, adding that the group had decided to delay investment in a new cargo centre at its Frankfurt hub by at least two years as it tries to protect its credit rating.
RATINGS HOPE
Spohr said discussions with the ratings agencies led him to believe that a downgrade is not on the cards.
Lufthansa's new mediation offer does not include its changes to its planned expansion of low-cost services, as originally requested by the pilots.
The union said it needed to wait to see the full offer before commenting in detail.
Shareholders at the meeting praised Spohr for his handling of the crash but questioned the logic of expanding low-cost operations and introducing another brand, Eurowings.
"We should focus on areas where we can be strong and offer a premium product," said Markus Neumann from SdK, which represents the interests of small shareholders.
In response, Spohr said that Lufthansa needed Eurowings, with 20 percent lower costs than budget operation Germanwings, to keep pace with rivals such as Ryanair (>> Ryanair Holdings plc) and easyJet (>> easyJet plc) and ensure short-haul traffic to its hubs in Frankfurt and Munich, from where it operates profitable long-haul flights.
(Reporting by Victoria Bryan and Peter Maushagen; Editing by Maria Sheahan and David Goodman)
