FRANKFURT, Sept 6 (Reuters) - German airline Lufthansa said it would make an improved offer to pilots on Tuesday in a bid to stop an escalation of a wage dispute after the union said it would go on strike again this week.

The announcement by the Vereinigung Cockpit (VC) pilots' union follows a strike last week that forced the cancellation of hundreds of flights, further plaguing a summer of travel chaos.

Passenger pilots will strike on Wednesday and Thursday, and cargo pilots from Wednesday through Friday, said the union, which groups more than 5,000 pilots.

Lufthansa said its crisis team would decide by 1200 local time (1000 GMT) on flight cancellations due to the planned action.

In a statement, the airline said the escalation was regrettable in light of planned talks on Tuesday.

"We will nevertheless do everything possible, even under time pressure, to succeed with an improved offer," said Michael Niggemann, head of HR at Lufthansa.

VC has demanded a retroactive pay rise of 5.5% from July 1 as well as a pay increase of 8.2% in 2023 in response to inflation.

So far, the airline has offered a 500 euro increase from Sept. 1 this year and 400 euros from April 1, 2023, said Lufthansa.

Chief Executive Carsten Spor said late on Monday the airline planned to hire nearly 20,000 new employees by the end of next year as the aviation industry recovers from the coronavirus pandemic, when global air traffic was paralysed. (Reporting by Tom Sims and Madeline Chambers; Editing by Clarence Fernandez, Miranda Murray and Louise Heavens)