Talks between Qantas Airways and its pilots, baggage handlers and caterers have broken down and all sides will now have to accept a settlement imposed by Australia's industrial umpire, which could help the airline in its bid to slash costs.
Qantas remains in talks with a third union representing its engineers in a bitter fight over pay and moving jobs to Asia, facing a midnight (1300 GMT) deadline to reach a settlement.
"We asked for a 21-day extension. We thought a negotiated outcome was possible, but they (Qantas) turned that down," said Anil Lambert, spokesman for the Australian and International Pilots Association.
Qantas said it, the pilots union and the Transport Workers Union had concluded they could not reach a deal and the dispute would now be resolved through binding arbitration.
"Qantas rejects claims that it terminated negotiations," a spokesman for the airline said.
Neither side can take any industrial action while the arbitration is ongoing, a key factor giving the airline comfort that it will not face any more travel disruptions.
The Transport Workers Union, representing baggage handlers and caterers, said the dispute would now go before arbitration after Qantas did not want to renew talks for another 21 days.
"Our fear is that Qantas will drag this out for as long as it can," a spokesman told Reuters.
The unions' main concerns centre on the airline's attempts to cut costs and set up two airlines based in Asia to stem A$200 million a year in losses on its international business.
Qantas says customers returning
"We haven't been able to reach a new agreement with the Transport Workers Union through negotiations so we will now let the independent umpire decide," Qantas CEO Alan Joyce said in a statement.
He said customers had returned "in large numbers" since the airline resumed flying after Qantas grounded its planes in late October in a drastic move aimed at ending disruptive industrial disputes.
The Australian and International Pilots Association has been demanding that all pilots on a flight with a Qantas code or sold as a Qantas ticket should be paid as much as Qantas pilots.
Shareholders and analysts said by not extending talks for a further three weeks and submitting to an imposed settlement by the Fair Work Australia commission, Qantas was clearly trying to reach a settlement as soon as possible.
"They're going to be better off than they have been. It'll be a more rational process," said Sondal Bensan, who helps manage BT Investment Management's stake in Qantas.
A year of talks
Qantas and the three unions were ordered on Nov. 1 by the industrial umpire, Fair Work Australia, to reach an agreement by Monday, after a weekend grounding of planes by Qantas.
Joyce and Qantas Chairman Leigh Clifford have taken a hard line against unions after failing to agree on a deal following more than a year of talks over pay and conditions.
"It looks like Qantas believes they will get the better outcome from deferring to a decision by Fair Work Australia rather than continue negotiations," said Scott Marshall, an analyst at Shaw Stockbroking.
Qantas said just ahead of the October weekend grounding of its entire fleet that the cost of industrial actions had totaled A$68 million ($68.4 million) and led to a collapse in forward bookings, a factor Qantas cited for grounding the fleet.
Qantas shares, which have fallen about a third so far this year, ended down 1.2% on Monday, underperforming a 0.2 %fall in the broader market. ($1 = 0.994 Australian dollars)