The holiday plans of nearly 1 million British Airways passengers have been thrown into chaos after cabin crew voted for a 12-day strike over Christmas and the new year.



The walkout by 12,500 cabin crew between 22 December and 2 January will ground Heathrow airport's largest carrier and will spark a scramble for tickets on rival airlines as passengers are forced to find alternative means of completing their journeys.

Cabin crew announced the strike dates at a highly charged meeting of Unite union members at Sandown racecourse this afternoon following a ballot of staff over changes to staff numbers and budgets.

If BA management and Unite representatives fail to reach a compromise agreement over the next week, the walkout will deal a crippling financial and reputational blow to the airline. BA is already on course to lose £600m in the current year after posting a record loss of £401m in the 12 months to March 2009.

However, the biggest blow will be to about 910,000 passengers who were booked to travel with BA on the strike dates, including the days before and after the scheduled strikes when services are also expected to be disrupted. BA expects to carry about 65,000 passengers a day over the festive period. The last serious industrial dispute involving cabin crew, in early 2007, saw BA refund passengers or switch them to services with other airlines if space was available and is estimated to have cost the carrier £80m.

The announcement of strike action came just a few hours after BA released details of a near-doubling of its pension deficit to £3.7bn, up from £1.9bn. Analysts said the pensions black hole – one of the largest pension fund deficits in the private sector – was bigger than expected, although not so high that it would derail the group's planned merger with the Spanish carrier Iberia.

A BA spokeswoman denied that the pension funds announcement was deliberately timed to coincide with the Sandown meeting. "The pension scheme is not an issue that is part of the ballot. Once we had reached an agreement with the pension trustees, we had to release it to the market." However, the widened funding gap underlines the loss-making airline's need to return to profitability as soon as possible.

"The airline and trustees will now work together to develop a recovery plan, a process which will involve the company consulting with employees and their trade unions," BA said.

Douglas McNeill, analyst at Astaire Securities, said the main issue for the airline was whether trustees put further strain on the carrier's balance sheet by demanding an increase in the annual £330m payment that BA pours into the funds. "This is a precursor to the main event with the trustees about whether cash contributions will have to rise. The company has a fairly strong case because it is on course to lose a lot of money this year. It can argue with a lot of conviction that it is in no position to increase payments in cash terms."

According to one analyst, a two-day strike would cost the airline £50m, with a 12-day walkout costing the airline about £300m. BA recently raised the amount of accessible cash on its balance sheet to about £2bn but had anticipated using that money to weather the effects of the recession, not a severe bout of industrial action.