British Airways cabin crew have voted in favour of strike action in protest over pay and are set to walk out for 12 days over the busy Christmas and New Year holiday season.
'We are planning to withdraw our labour for a period of 12 days starting December 22,' Britain's biggest trade union Unite said in a statement after staff voted 9-1 in favour of striking.
The announcement is a big major blow for the loss-making airline and up to a million BA passengers planning to fly worldwide with the British airline over the festive period.
Unite said it did not take the decision lightly, especially in view of the airline's financial problems.
The strike could cost BA around £50m in lost revenues and refunds, analysts say. The decision to strike will likely boost ticket sales on rival airlines as passengers look for alternatives.
BA pensions gap could widen
British Airways has said its pension deficit more than doubled to £3.7 billion at the the end of March, higher than analysts expected but not seen as big enough to derail a merger with Spain's Iberia.
BA and Iberia announced in November that they had reached a preliminary agreement for a merger after months of negotiations.
BA's pension deficit was one of the main stumbling blocks in the merger negotiations and Iberia has reserved the right to back out of the deal if the funding hole turns out to be too big.
Nevertheless, the deficit figure of £3.7 billion could be higher by the time the valuation process is completed in June next year because Britain's Pensions Regulator believes the assumptions used to calculate the shortfall are too optimistic.
'The regulator's provisional view is that the technical provisions may be materially below a level it feels appropriate,' BA said in a statement.
BA said the airline and pension trustees will work together to develop a recovery plan, a process which will involve the company consulting employees and their trade unions and which must be completed by June 30, 2010.
BA and Iberia hope to conclude a merger deal by the end of 2010 and attention is now expected to switch to the nature of any pensions deal the British carrier can strike with its staff and what proportion of the gap will be covered by the company.
