By Victoria Bryan

BERLIN (Reuters) - Lufthansa <LHAG.DE> pilots in Germany said they would extend strike action that began on Wednesday until Friday, ratcheting up pressure on management in a long-running pay dispute and promising further disruptions for travelers.

The walkout has already grounded 1,800 flights at one of Europe's largest airlines, affecting more than 215,000 passengers.

The Vereinigung Cockpit (VC) pilots' union had planned a 24-hour walkout on Wednesday but late on Tuesday said it would be extended to Thursday after two courts rejected attempts by Lufthansa to halt the industrial action.

On Wednesday evening, the union said the walkouts would continue on Friday too, but only on short-haul flights.

"Lufthansa management has shown no sign that it is willing to move and has not provided an offer that could serve as a basis for negotiations," VC board member Joerg Handwerg said.

Lufthansa, led by CEO Carsten Spohr, insists that despite a record profit in 2015, it has no choice but to cut costs to compete with leaner rivals such as Ryanair <RYA.I> on short-haul routes and Emirates [EMIRA.UL] on long-haul flights.

Shares in the company have lost 12 percent of their value this year, but were steady on Wednesday.

Lufthansa canceled 876 of roughly 3,000 flights scheduled by its group airlines for Wednesday, and scrapped 912 flights for Thursday, in what is the 14th strike in the dispute since early 2014.

Lufthansa's CEO has said he expects the strike to cost between 7 million euros and 9 million euros ($7.4 million to $9.6 million) a day.

The strike started at midnight and affects flights departing from German airports, including 133 long-haul flights.

HOTELS FOR STRANDED

Flights by Lufthansa's other airlines, including Germanwings, Eurowings, Austrian Airlines, SWISS and Brussels Airlines, will not be affected, Lufthansa said.

Austrian and SWISS are using larger planes to carry passengers during the strike, while Lufthansa has reserved almost 4,000 hotel rooms in Frankfurt and Munich for stranded passengers.

The airline has called on the pilots to enter mediation, which has been rejected by their union because it is seeking a better offer from management first as a basis for talks.

The union wants an average annual pay increase of 3.7 percent for 5,400 pilots in Germany over a five-year period from 2012. Lufthansa has offered 2.5 percent spread over six years to 2019.

In its effort to reduce costs, Lufthansa has agreed deals on pay and retirement schemes with the main unions representing ground staff and cabin crew in Germany.

"It is incomprehensible that the union is calling for the biggest pay increase for the most well-paid group of staff," Lufthansa board member Bettina Volkens said in a statement.

A pilot at Lufthansa earns on average 180,000 euros ($190,000) a year before tax, though a captain on the highest pay level can earn as much as 22,000 euros a month before tax.

(Additional reporting by Peter Maushagen; Editing by Alexander Smith and Susan Fenton)