Australia's Qantas hit by widening strikes

CANBERRA, June 24 (Reuters) - Australia's Qantas Airways Ltd (QAN.AX) cancelled 18 flights on Tuesday and was reportedly moving critical maintenance tasks overseas as a campaign of strikes by engineers widened to the country's west.

Members of the Australian Licensed Aircraft Engineers Association (ALAEA) walked off the job in four of the country's biggest cities, disrupting flights in Sydney, Melbourne, Brisbane and Perth, over Qantas's refusal to grant a 5 percent wage rise.

The airline is offering 3 percent for around 1,500 engineers.

"If you are able to make A$1.4 billion ($1.3 bln) in such a tough climate, and you've made it off the back of your employees working very, very hard, I think that it is appropriate that you give something back to them," said ALAEA federal president Paul Cousins.

Qantas, Australia's biggest airline, reported net profit of A$617.6 million for six months ended December, doubling its first-half earnings on strong demand for air travel and trimmed fuel costs.

The carrier, the world's 10th-largest by market value, said in May said it still expected to achieve its target of 40 percent profit growth for the current year, which ends on June 30.

But in the same month, ratings agency Standard and Poors revised its outlook for Qantas to negative from stable, reflecting pressure on the carrier's cash flow from a fuel bill expected to rise by $1.9 billion in 2008/09.

The airline, like many other Australian firms, is facing a conundrum with inflation running at just over 4 percent while workers are demanding bigger pay rises in line with a booming resource economy in its 16th year of expansion.

At the same time, consumer demand is cooling, fuel prices are on the rise and employers are looking to cut costs.

In an effort to adjust, Qantas is looking to permanently move many critical maintenance jobs offshore by employing engineers in London and the United States, possibly antagonising union members at home, the Australian newspaper reported.

Qantas Chief Executive Geoff Dixon said American engineers in Los Angeles (LAX) recently completed two full aircraft maintenance inspections, known as A-checks, while other inspections were outsourced to Avalon airport in Melbourne.

"I will confirm that we are now doing A-checks in Avalon and LAX, and we are looking at other options," Dixon told the paper.

In a letter to staff, Dixon said the Qantas board met in New York last week and told executives to hold out against "untimely" engineer pay demands, meaning the campaign of rolling strikes will likely drag on beyond the current two-day stoppage.

"We have what I regard as a very sophisticated and fair wages policy. We are not going to change it now," Dixon said.

"You just couldn't contemplate our wages policy changing when we are being hit with such a huge increase in the price of oil," he said.

Cousins said up to 15 Qantas managers from around Australia, all former engineers, had also worked on Melbourne aircraft as local staff joined 500 workers striking nationally. The stop-work also disrupted up to eight international flights.