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British Airways seeks mediation help to avert strike

British Airways Plc, Europe's third- largest airline, called for outside mediation to help avert a three-day strike by cabin crew over pay, pensions and staffing.

The carrier requested the Advisory, Conciliation and Arbitration Service discuss ways of solving the dispute with flight attendants of the Transport & General Workers Union, the company said today in a statement. A strike next week will be the first official industrial action by cabin crews since July 1997. That strike cost the airline £127 million ($250 million) over three days. British Airways has faced a series of disruptions in the past year, including union rejection of its pension proposal, security alerts at London's Heathrow airport and foggy weather. „It's been one thing after another,” said Howard Wheeldon, an analyst at BGC Partners LP. „The debilitating factor is that the customer, at some point, sees this as an unreliable airline.” Shares of British Airways fell as much as 13.75 pence, or 2.5%, to 530.75 pence and were down 1.6% at 11:31 a.m. in London. The stock has gained 72% over the last 12 months as CEO Willie Walsh cut costs.

The Transport & General Workers Union, which represents 11,000 of 14,000 cabin attendants, said yesterday talks with the airline had failed. Its members plan to strike January 29 if they don't reach a settlement. Two more three-day walkouts might follow. A strike would cause „massive disruption” for customers, London-based British Airways said in a statement. Anthony Cane, a British Airways spokesman, estimated that about 77,000 customers would be affected for each day of a strike. The union objects to work rules introduced by Walsh, who joined the airline in 2005. Reductions in sick leave and the number of flight attendants on planes are part of Walsh's program to save £450 million by March 2008. „Our members are fed up with being bullied into coming to work when sick and with division caused by poverty levels,” said Jack Dromey, the union's deputy general secretary, in a statement yesterday.

Workers resent „the airline's reputation being damaged by bungling management.” Acas is an independent organization made up of employers and trade union representatives. It has helped mediate labor disputes including the 2002 discord between the British Broadcasting Corp and its journalists. Both British Airways and the T&G would have to sign up voluntarily to Acas's conciliation service, Lou Owen, a spokeswoman for Acas, said. She declined to comment on what the mediation would entail. „We are in contact with both parties,” she said. „The actual structure” of the arbitration service's involvement „will be discussed and agreed with all the parties,” said Cane, the British Airways spokesman.

Andrew Dodgshon, a spokesman for the T&G, said the union would welcome Acas's help and had used them „on many many occasions in the past. But it should be possible for British Airways to resolve this themselves within 48 to 72 hours.” Pay demands from the union would involve increases of as much as 18%, British Airways said. The union is seeking the merger of separate pay scales created in 1997 for cabin employees hired before and after that year. A unified pay scale would cost British Airways up to £50 million a year, said Paul Marston, a company spokesman. Union proposals would mean average cabin crew absence allowance would rise toward 22 days a year, the airline said. British Airways has reduced sick leave for cabin crew to 12 days from 25 days a year. The airline has been accused by the union of operating with an insufficient number of staff.

„It's difficult to see what they can do if all of the cabin crew walk,” said Nicholas van den Brul, an analyst at Exane BNP Paribas with an `underperform' recommendation on the stock. „There's a legal requirement for the minimum number of cabin crew you can have on board.” Most of the about 3,000 cabin crew who don't belong to the T&GWU are members of the Amicus trade union, which isn't in a contact dispute with the airline. British Airways said passengers booked to fly between January 29 and February 16 can contact it to change the dates of their trips. Air France-KLM Group and Deutsche Lufthansa AG are, respectively, the No. 1 and No. 2 airlines in Europe. (Bloomberg)