By Matt O'sullivan
QANTAS has gained a much-needed fillip in its damaging stand-off with unions after reaching an in-principle agreement for a new pay deal covering more than 2100 domestic flight attendants.
As baggage handlers and other ground crew called off - at the 11th hour - a nationwide strike planned for today, Qantas has agreed to a 3 per cent annual wage rise over the three-year life of the new contract for members of the Flight Attendants Association of Australia's domestic division.
U-turn ... baggage handlers and ground crew called off today's strike action at the 11th hour.Credit: Jason South
The deal for short-haul cabin crew also includes a $500 lump sum each year.
The flight attendants will still need to vote on the new contract late this month but the in-principle deal will be a relief for Qantas executives who are facing an increasingly acrimonious battle with three unions representing licensed aircraft engineers, long-haul pilots and ground crew.
CBA Equities has cited the cost of the industrial dispute as one of the reasons why it no longer believes Qantas's premium international operations will break even this financial year. The broker has slashed its expectations of cost savings from the international business this year from $85 million to $25 million.
The industrial unrest comes as Qantas and Virgin Australia vied for bragging rights yesterday over winning travel business from Rio Tinto. Qantas trumpeted it had been re-signed as a ''major air service provider'' by the mining giant for the next three years, while its rival said it had won part of the miner's travel contract. However, it is a bigger victory for Virgin because it is one of its largest corporate wins since it began a revamp last year aimed at winning a bigger slice of Australia's $5 billion business travel market.
After hitting an all-time low early this week, shares in Qantas rallied 5 per cent to $1.445 yesterday, boosted by a rebound in the sharemarket. Virgin closed up 1¢ at 31.5¢.
The in-principle agreement with the FAAA's domestic arm ends six months of negotiations over a new three-year contract. In contrast, Qantas has been bogged down in talks with the long-haul pilots union for more than a year over a new enterprise agreement.
Although they will resume negotiations early next week, the sides remain deadlocked over the pilots' demands for job-security clauses to be inserted in contracts.
Last night, the Transport Workers Union, which represents baggage handlers and other ground crew, called off a two-hour stoppage planned for today. But Qantas said it was too late to reinstate 17 flights cancelled earlier in preparation for the strike. It accused the union of waiting until shortly before the planned strike action to call it off in order to disrupt passengers.
The TWU said its members would resume strike action next Thursday unless Qantas management put a ''firm offer'' on the table.
Qantas passengers also face disruptions on Monday when the airline's licensed aircraft engineers plan to stop work for four hours in Sydney, Melbourne and Brisbane.