What was Luther's plan when he killed Cyrus in The Warriors?

My question is, what were Luther's intentions and what did he expect to happen after the whole scheme of killing Cyrus and blaming the warriors worked?

The plan was simple; get the wrath of the other gangs off his back. As you said, he wasn't down with the plan so his first action was to kill the plan. Once he did that, he had to direct the blame onto another gang, and one of The Warriors just happened to be in the wrong place at the wrong time.

The movie answers your question:

No reason, I just like doin' things like that.

From the horses mouth.

There is no definitive answer in the movie but there are clues that point to Luther doing this for someone else. At approximately 29:18 in the movie we see Luther on the phone in a candy store having the following conversation:

Yeah. How are you? I was just checking in. Yeah, it was a real mess up there. This guy Cyrus had an accident. They did? Well, that's OK. These guys, the Warriors... Yeah. They deserve it. Yeah. We will. Take care of yourself.

In an interview with The Warriors Movie Site David Patrick Kelly who played Luther was asked who he was speaking to on the phone in that scene. He stated:

Walter and I didn’t talk too much about who Luther was speaking to on the phone. I think he only said “the Boss”. I made up a character as “the Boss” who combined political corruption with gangsterism, someone Luther knew from a young age, a kind of mentor who Luther was anxious to please, a kind of Fagin/Boss Tweed.

Fagin is a character from Charles Dickens' Oliver Twist. He taught street urchins how to be pickpockets along with other criminal activity. William Magear Tweed or "Boss" Tweed was a New York City politician in the mid 1800s who stole an estimated $25-45 million from taxpayers through corruption. In other words someone who may have brought Luther into the gang life and taught him about crime but may now play a part in city government. The Boss may also be a member of the Westies, an Irish-American mob that ran Hell's Kitchen where the Rouges are from according to the 2005 Warriors video game.

Why someone like "The Boss" would want Cyrus dead is found in Cyrus's speech at the beginning of the movie. At 10:47 he says,

One gang could run this city. One gang! Nothing would move without us allowing it to happen. We could tax the crime syndicates, the police, because we got the streets, suckers.

Whether "the Boss" is a corrupt official or a mobster either one would obviously want Cyrus dead.