Australia's Qantas Airways grounded its entire fleet today over an ongoing industrial dispute.
Tens of thousands of passengers, including 17 world leaders, were affected by the abrupt decision, which clearly took the government by surprise.
It came as an embarrassment for prime minister Julia Gillard who was hosting a Commonwealth leaders summit in the remote city of Perth, 17 of them booked to fly out tomorrow with Qantas.
Unions, from pilots to caterers, have taken strike action since September over pay and opposing Qantas plans to cut its soaring costs, as it looks at setting up two new airlines in Asia and cutting back financially draining long-haul flights.
It plans to cut 1,000 jobs and order $9 billion of new Airbus aircraft as part of a make over to salvage the loss making international business.
"They are trashing our strategy and our brand. They are deliberately destabilizing the company. Customers are now fleeing from us," Qantas chief executive Alan Joyce said.
"(The unions) are sticking by impossible claims that are not just to do with pay, but also to do with unions trying to dictate how we run our business," said Mr Joyce, who estimated the latest move would cost the airline A$20 million a day.
The move came a day after shareholders backed hefty pay rises to senior Qantas executives.
Mr Gillard said the escalating dispute could hit the economy. "I believe Australians want to see this sorted out."
Qantas said it would lock out all employees from Monday night in the dispute which has affected 70,000 passengers and 600 flights on one of the country's biggest travel weekends. The grounding does not affect Qantas' budget airline Jetstar.
Adding to travelers' problems, Air France has canceled about one in five flights and warned of wider disruption as a five-day strike by flight attendants over employment terms began on Saturday.
The dispute is the worst Qantas has faced since 2008, when industrial action by engineers cost it A$130 million, according to local media.
"I'm extremely disappointed. What's more, I indicated very clearly to Mr Joyce that I was disturbed by the fact that we've had a number of discussions and at no stage has Mr Joyce indicated to me that this was an action under consideration," said transport minister Anthony Albanese.
The government had asked for a special labor tribunal hearing to end the industrial action by both unions and Qantas.
The tribunal will hold a hearing tonight. If it orders an end to the industrial action Qantas is expected to be flying again tomorrow.
Reuters