UPDATE 2-BA pilots' union ends court action, mulls options

(Adds further union comment, BA comment)

By Chris Wills

LONDON, May 22 (Reuters) - A pilots' union has withdrawn court action against British Airways (BAY.L: Quote, Profile, Research, Stock Buzz) which could have grounded the fleet of Europe's third-largest airline in the first such strike for nearly thirty years.

Shares in British Airways surged to close 4.7 percent higher at 212.5p on Thursday after the British Air Line Pilots' Association (BALPA) withdrew the action against British Airways (BA), which could have seen its members stage a costly strike.

A spokesman for BALPA -- which counts 3,000 BA pilots among its members -- told Reuters however, they do not necessarily consider this the end of the matter.

"We have withdrawn the court action," said BALPA spokesman Keith Bill, confirming it was no longer planning a pilots' strike. "But we may pursue other action against BA. That's to be decided," Bill said, without elaborating.

The union had gone to court because members were unhappy that pilots at BA's new OpenSkies airline will have different conditions to existing BA staff.

A potential pilots' strike had been the latest problem facing the airline, which faced a storm of criticism over lost luggage and cancelled flights when Heathrow's fifth terminal was opened at the end of March.

But it has in part weathered that storm, recently announcing profits had soared 45 percent in the last year.