FRANKFURT (Reuters) - German airline Lufthansa (>> Deutsche Lufthansa AG) has picked Carsten Spohr to succeed Chief Executive Christoph Franz, naming a company veteran to lead the battle against low-cost carriers and fast-growing Gulf airlines.

Germany's largest airline has been looking for a new CEO since September, when it was announced that Franz would leave at the end of May to become chairman at Swiss pharmaceuticals company Roche (>> Roche Holding Ltd.).

It said on Friday that Spohr, who has been head of the carrier's passenger airline business since 2011, will take up the post of CEO on May 1.

Like other European legacy carriers, Lufthansa is battling competition from budget carriers Ryanair (>> Ryanair Holdings plc) and easyJet (>> easyJet plc) as well as Gulf airlines like Emirates, which are expanding rapidly in the market for lucrative long-haul customers.

Spohr, from Wanne-Eickel in Germany's industrial heartland, will be taking over in the middle of the airline's SCORE restructuring programme, which aims to improve operating profits to 2.3 billion euros (1.8 billion pounds) in 2015, compared with 524 million in 2012.

The 47-year-old has had a rocky time in his current position, with passenger airlines taking the biggest hit from a savings programme launched by Franz and therefore drawing the most wrath from workers over job cuts.

The news of his appointment comes as pilots' union Vereinigung Cockpit ballots more than 5,000 Lufthansa pilots on whether to go on strike in a pay dispute.

Spohr worked his way up through the ranks to become the CEO of Lufthansa Cargo in 2007. Four years later, he was promoted to the group's management board to oversee its passenger airline business, taking over from Franz.

"As a Lufthansa man 'born and bred', I view the appointment as the new CEO as both an honour and an obligation," said Spohr, who holds a commercial pilot's licence to fly Airbus A320-family planes.

He said he was convinced that Lufthansa was on the right track and said he aimed to make Lufthansa "resilient and ready for the future also beyond 2015".

Shares in Lufthansa were up 1.9 percent at 17.74 euros by 1050 GMT, outperforming a 0.3 percent gain by Germany's blue-chip DAX index <.GDAXI>.

(Reporting by Victoria Bryan, Peter Maushagen and Maria Sheahan; Editing by Philipp Halstrick and Pravin Char)