Qantas to resume flights after government intervenes in dispute

MELBOURNE/SYDNEY (Reuters) - Australia's Qantas Airways scrambled to get back in the air on Monday, having grounded its entire fleet over the weekend in a bold tactic to force the government to intervene in the nation's worst labor dispute in a decade.

Qantas had taken the drastic step to ground all flights on Saturday, disrupting around 70,000 passengers and spurring the government and its labor-market regulator into action to seek an immediate end to hostilities between the airline and unions.

At the government's instigation, Australia's labor tribunal stepped in and ordered Qantas to resume flights and also banned trade unions, which have waged a long and damaging campaign of industrial action, from staging any more strikes.

Qantas CEO Alan Joyce, dubbed a kamikaze by a newspaper for effectively staging his own strike against the unions at the weekend, welcomed the tribunal's ruling, which gives both sides 21 days to settle the dispute or submit to binding arbitration.

That was the only way we could bring that to a head, a bleary-eyed Qantas Chief Executive Alan Joyce told reporters on Monday as shares in the airline jumped 6 percent on the ruling.

Qantas says it has lost almost A$70 million since September from industrial action in its dispute with three trade unions over pay, working conditions and a plan to base more operations in Asia. Joyce had complained of death by a thousand cuts and said the future of the 90-year-old airline was at stake.

Qantas said flights were set to resume on Monday afternoon, on a limited schedule and subject to regulatory clearance. The airline hoped to return to normal in 24 hours.

Despite Qantas's share price rebound, the stock has lost more than a third of its value this year and investors worry about longer-term damage to the brand from the grounding, which disrupted the travel plans of some leaders at the end of a summit of Commonwealth nations in the western city of Perth.

I will never ever even think of flying Qantas in the future. Happy, Alan Joyce?, said Robert Moore in a posting on the airline's Facebook page.

Qantas counters were still deserted at airports on Monday morning, but the mood on the street in downtown Sydney was also that Joyce may have overplayed his hand.

It's a very Machiavellian move and it'll damage the reputation of Qantas. I don't think it necessarily had got to that stage yet, they could have still worked with the unions to get a better outcome, Michael Williams, a company director, said as he walked through the financial district.

PM FUMING

The government also welcomed the tribunal's ruling, which came in the early hours of Monday.

We are pleased that after 24 hours of turmoil that common sense will be restored to the aviation and tourism sectors of Australia, Assistant Treasurer Bill Shorten said.

But with 108 aircraft grounded, almost 500 flights canceled and Australia's tourism image tarnished in a single weekend, Prime Minister Julia Gillard was left fuming at Qantas's tactic.

I believe Qantas took an extreme approach on Saturday, Gillard told Channel Seven TV. With very little notice to government or passengers, it grounded planes. It did that in circumstances where it had other options.

The dispute has dogged Qantas for months but it escalated recently when it announced plans to cut 1,000 jobs and order $9 billion worth of new aircraft as part of a makeover to salvage its loss-making international business.

The airline made a pre-tax profit of $552 million in the year to June 30.

Union representatives said they would work with Qantas to resume flights as soon as possible but some sought to cast Joyce as a reckless manager prepared to risk the airline.

The board should immediately sack their out-of-control CEO, said Captain Richard Woodward, vice president of the Australian and International Pilots Association. He described Joyce's behavior as megalomaniacal.

Qantas carries about a fifth of Australia's international passengers and, according to Joyce, the weekend grounding of the fleet cost the airline about A$20 million each day.

MASSIVE DISRUPTION

The labor tribunal had deliberated for more than 12 hours as lawyers for the airline, union and government questioned executives and advisers made submissions.

Qantas said a series of rolling stoppages by unions had cost the airline almost A$70 million since September and driven down bookings, threatening its survival.

The Qantas dispute is the latest in a tide of industrial unrest as unions press for a greater share of profits amid tight labor markets and high commodity prices.

It had threatened to become the most significant disruption to Australian aviation since a six-month 1989 dispute forced the government to use the airforce to keep flights running. Strikes by engineers cost Qantas around A$130 million in 2008.

Qantas airline, which usually flies more than 60,000 people a day, has been paying for accommodation and expenses for stranded travellers over the weekend and arranging on alternative flights.

Australian rival Virgin Australia said earlier it was adding 3,000 seats on its domestic network on Monday, in addition to 3,500 seats on Sunday.

Virgin Australia's airline partners Abu Dhabi's Etihad Airways and Air New Zealand said they were looking at options to increase capacity to and within Australia.

Qantas' decision left many passengers venting their anger after they were stranded in 22 cities around the globe.

The weekend was one of Australia's busiest for travel, with tens of thousands traveling to the hugely popular Melbourne Cup horse race on Tuesday.

(Additional reporting by Narayanan Somasundaram, Amy Pyett and Ed Davies in SYDNEY and James Grubel in CANBERRA; Editing by Mark Bendeich)