Qantas, unions head to arbitration after talks collapse

(CNN) -- Talks between Qantas Airways and two unions over pay and conditions collapsed Monday, and the two sides now face binding arbitration by Australia's labor relations tribunal.

"We made a generous offer which included reasonable increases in pay and conditions, protections on the jobs of existing Qantas employees and Qantas maintaining the flexibility we need to run the airline. The union rejected this offer," Qantas Chief Executive Officer Alan Joyce said. "We did make some progress but we simply cannot agree to all of the union's demands."

The dispute with the unions has dragged on for 14 months.

It involves the Transport Workers' Union, pilots and engineers of Australia's largest domestic and international airline.

Union officials have accused Qantas of planning to outsource ground jobs at a cost of thousands of Australian jobs and of putting profits first. Pay and working conditions have also been at the center of the dispute.

In October, the airline grounded 447 flights and said it would lock out its unionized pilots; engineers; and ramp, baggage and catering crews.

The labor relations tribunal Fair Work Australia stepped in and ordered an end to the dispute to avoid damage to the tourism industry.

It gave the two sides three weeks to reach an agreement, with a possible three-week extension if talks were making progress.

But before Monday's midnight deadline, the pilots and Transport Workers' Union -- which represents baggage handlers and caterers -- called off talks with the airline, saying they had reached an impasse.

Talks between the airline and engineers continue.

Qantas, which has its headquarters in Sydney, is the second-oldest airline in the world and marked its 90th anniversary last year.

It employs about 32,500 people and flies to more than 180 destinations worldwide, according to the company website.

Posted in: World business