The announcement by British Airways of plans to cancel 1,300 flights, despite a proposal by the Transport and General Workers Union to suspend strike action planned for Monday, is a dramatic signal to worried passengers that a long-rumbling dispute has now turned nasty. The airline has about 14,000 cabin crew members, and of the 10,700 who belong to the TGWU more than three quarters have voted for strike action.

Ostensibly, the dispute is about two relatively minor issues: the determination by BA to cut the very high number of sick days taken on average by its staff; and the abolition of one of four pursers on all 747 planes, cutting the chances of promotion for ordinary cabin staff. In fact, far more is at stake. For BA staff, the dispute is the culmination of a series of bitter confrontations that have led to strikes — usually unofficial — almost every year and to dangerously low morale. For the airline, this is seen as a crucial test of whether it can reshape its operations to compete effectively in an increasingly tough market.

The row over sick leave does suggest, to many, that the airline itself is sick. This will certainly be the view of thousands of passengers at Heathrow and Gatwick who have had their flights cancelled, and whose resentment has been fuelled by earlier public relations disasters: the strikes by baggage handlers, caterers and check-in staff and the chaos caused by the sudden imposition last year of tighter security checks. In fact, however, BA’s long-term health looks bright: Britons fly more than anyone else in Europe, and the airline has a coveted 40 per of the slots at Heathrow, the world’s busiest international airport. Like all full-service airlines, BA is suffering from the strong competition of budget airlines, but has been fairly quick to adapt, with the promotion of cheap fares in Europe that almost match the low-cost carriers. It is certainly in leaner shape than chronically sick airlines such as Alitalia.

Nevertheless, BA faces huge challenges. Its pensions burden, the result of previous generous packages and early-retirement schemes, is the biggest of any leading British company. Plugging the black hole would be hard in any circumstances. But BA is also having to retrench on other fronts as well. Some of the perks that its staff enjoy, such as cheap flights, are affordable; but others, negotiated in a pre-budget-airline age, are not. Tightening conditions on rotas, staffing levels and benefits is deeply unpopular. But unless it is achieved, the airline will cease to be competitive.

Willie Walsh, the chief executive, has been recruited specifically to administer the same tough medicine that he forced Aer Lingus to swallow. He has already effectively played on inter-union rivalry by using an agreement with Amicus, the smaller union, that ensures that about 2,000 cabin crew will not be on strike. The TGWU has picked the wrong time for a showdown because this is a quiet month when other airlines are able to accommodate passengers stranded by a strike. One danger, however, is that BA may be able to force through the desired changes, but will so poison relations that Mr Walsh will jeopardise the goodwill needed to strengthen the airline’s position. He needs the striking staff — retraining others quickly to take their place is not an option. But they, in turn, need a viable BA. Without that, there will be no job, with or without sick leave, for them to return to.