Lufthansa passengers are facing hundreds of possible flight cancellations after last-ditch talks to avert a strike by cabin crew at Germany's leading airline collapsed early on Tuesday.

A spokesman for Lufthansa said negotiations in a 13-month pay dispute with labour union UFO ended without an agreement.

UFO, which represents 18,000 Lufthansa flight attendants, declined to comment, but a source close to the union said negotiations to end the pay dispute broke down late on Monday.

UFO has said it would resort to staging strikes if it failed to come to an agreement with Lufthansa and was due to hold a news conference at 11:00 SA time.

The move comes as Lufthansa cuts 3,500 jobs - about 3 percent of its global workforce of 117,000 - and freezes investment, aiming to boost earnings which had been squeezed by soaring fuel prices and competition from low-cost and Middle East carriers.

Lufthansa has also shifted the contracts of pilots and flight attendants at carrier Austrian Airlines to a lower-cost subsidiary and has boosted cooperation between its main Lufthansa brand and low-cost carrier Germanwings.

A strike by flight attendants could cause hundreds of flight cancellation, resulting in significant costs for Lufthansa.

When Lufthansa pilots called a four-day strike in 2010, the airline said the industrial action would cost 25 million euros ($31.3 million) in lost revenue per day. Earlier this year, it put its costs from a strike of airfield employees at its main hub in Frankfurt in the high tens of millions of euros.

Lufthansa shares were down 2.4 percent at 9.68 euros by 10:26 SA time, underperforming Germany's blue-chip DAX index, which was 0.7 percent lower. Shares in Fraport, the operator of Frankfurt airport, were down 0.3 percent. - Reuters