Unions and management are disputing the impact of the first day of a three-day walkout by British Airways cabin crew.

The Unite union, which represents crew members, said more than 80 planes were grounded at Heathrow and an “enormous” amount of flights had been cancelled.

BA said staff were turning up in enough numbers to maintain its revised schedule for Heathrow and Gatwick.

Staff are striking over pay and working conditions, with a further four-day walkout planned for 27 March.

‘Contingency plan’

Unite national official Steve Turner said on Saturday morning: “I have seen the 80-plus aircraft that are grounded right now.

“British Airways have cancelled an enormous amount of flights and many passengers have realised that given the turmoil they are likely to face today, they are not going to travel and have sought and achieved a refund.”

BA said it aimed to fly as many passengers as possible over the weekend.

A spokesman said: “At Heathrow and Gatwick we have got off to a good start. London City is operating as normal.

“Cabin crew are reporting as normal at Gatwick and the numbers reporting at Heathrow are above the levels we need to operate our published schedule.

“This is the biggest contingency plan we have ever launched. Our main aim, since we published our schedule, has been to give our customers as much information as early as possible so that they can choose the most convenient option.”

Flight numbers

BA said that 65% of passengers would still be able to reach their destination during the first three-day strike, even though a total of 1,100 BA flights out of the 1,950 scheduled to operate would be cancelled.

At Gatwick, all long-haul flights and more than half of short-haul flights are expected to operate as normal.

At Heathrow, more than 60% of long-haul flights will operate, though only 30% of short-haul flights are expected to do so, with the help of aircraft hired in from other carriers.

Uncertainty still exists about just how many BA crew will go on strike after BA said that any staff who took part in strike action would lose perks, including heavily-discounted travel fares.

BA said it was confident that it could handle 49,000 passengers on each of Saturday and Sunday, compared with around 75,000 on a normal weekend day in March.

In a video message on the BA website, chief executive Willie Walsh apologised to passengers for what he said was a “terrible day” for the airline.

However, he said he was confident that a “good service” would be provided.

Mr Walsh and Unite union joint general secretary Tony Woodley failed to reach an agreement to avert action on Friday in the increasingly bitter dispute. After the talks failed, Mr Woodley said Mr Walsh wanted to “go to war” with the union. Mr Walsh dismissed the claim as “absolute nonsense”.

Mr Woodley had called on BA to put an earlier deal to end the strikes “back on the table”, which he said would have allowed him to call off the strike while union members considered it.

Instead, Mr Walsh offered a less attractive deal to compensate the company for the costs already incurred in making alternative arrangements for some passengers to fly during the strikes.

Mr Woodley called the revised offer a “disgrace and an insult”, and refused to present it to union members.

‘Fairly quiet’

BBC business correspondent Joe Lynam, who is at Heathrow, said the situation at Terminal 5 was relatively quiet early on Saturday morning.

He said: “I spoke to a few passengers, they had been expecting delays, but for the most part they had made contingency plans, just as much as British Airways had made contingency plans.

“Those contingency plans seem to be paying dividends because so far it’s moving smoothly.”

Former BA cabin crew manager Jamie Bowden said most of the check-in staff at Terminal 5 were working without any disruptions.

He told BBC News: “The leased aircraft that British Airways have chartered in, they are part of the normal computer system now, and so far things are going pretty smoothly.

“Of course, British Airways’ long-haul flights from Terminal 5 won’t start until later on this morning so predominantly the first three or four hours are going to be short-haul, but so far it seems to be fairly quiet over there.”

Cost cutting

Among the passengers inconvenienced is James Alexander, from Newcastle, who is due to emigrate to Australia with his partner on Monday, the last day of the strike.

He said: “I’ve told them today on the phone I’ll never fly BA again. Never. Just purely as a matter of principle now. This is chaos.”

BA has been in negotiations with Unite for many months.

Workers are particularly angry that last November BA reduced the number of crew on long-haul flights and is introducing a two-year pay freeze from 2010.

The airline also proposed new contracts with lower pay for fresh recruits.

Unite says it accepts the need for BA to cut costs, but that it was not consulted on the changes.

BA suffered a loss before tax of £342m for the nine months to the end of December 2009 and says it needs to cut costs in order to survive.

The Anglo-Australian mining company Rio Tinto says it has signed a deal with China to develop a massive iron ore mine in West Africa.

China’s state-backed metals group Chinalco will pay $1.3bn (£0.85bn) for 47% of the Simandou project in Guinea.

The tie-up comes amid tensions between China and Australia over next week’s trial of four Rio employees on bribery and commercial spying charges.

China has rejected requests for the trial to be fully open to diplomats.

The four accused, Australian Stern Hu and three Chinese colleagues, Wang Yong, Ge Minqiang and Liu Caikui, were arrested last June and go on trial in Shanghai on Monday.

At the time of their arrest they were working on an iron ore price-setting round which would determine the price that China and other customers would pay for the commodity for the year - an annual process that is now under way again.

The Australian embassy in Beijing has been told by the Chinese authorities that parts of the trial relating to commercial secrets will be held behind closed doors.

The Australian department of foreign affairs and trade said it was disappointed but “does not propose to make further representations on this matter”.

And Australian Trade Minister Simon Crean said trade ties with China would not be harmed by the forthcoming trial.

“The two matters are separate,” Mr Crean told ABC. “We are treating the Stern Hu case strictly as a consular case. We’ve never sought to make any link and neither have the Chinese in their discussions with us.”

In a statement, Rio Tinto CEO Tom Albanese welcomed the Chinalco tie-up.

“We have long believed that Rio Tinto and Chinalco could work together on major projects for mutual benefit,” he said.

A month before the arrests, Rio scrapped a $19.5bn (£12.5bn) deal with Chinalco in favour of a tie-up with rival giant BHP Billiton.

Jobs for Guinea

According to Rio Tinto, Simandou is one of the world’s biggest undeveloped iron ore deposits.

The deal also covers rail and port infrastructure and could create tens of thousands of jobs in Guinea.

BBC Guinea reporter Alhassan Sillah says the timing of the announcement is no coincidence, coming just two weeks after a date - 27 June - was set for elections in Guinea to restore civilian rule.

He says the international community has renewed faith that the military junta will return to barracks.

Last year, China was condemned by human rights groups after it signed a $7bn (£4.5bn) mining and oil deal with the government just two weeks after some 150 protesters were allegedly killed by soldiers.

A strike by British Airways cabin crew will go ahead after talks between the airline and the Unite union collapsed.

A three-day strike begins at midnight on Saturday, with a four-day strike scheduled to commence on 27 March.

BA said 65% of passengers would reach their destination during the action. Chief executive Willie Walsh said the strike was “deeply regrettable”.

Unite’s joint general secretary Tony Woodley claimed that BA “ultimately wants to go to war with this union”.

Separately, railway signal workers have voted in favour of strikes in a row over jobs and safety.

‘Serve passengers’

A total of 1,100 BA flights out of the 1,950 scheduled to operate during the first three-day strike will be cancelled.

At Gatwick, all long-haul flights and more than half of short-haul flights are expected to operate as normal.

At Heathrow, more than 60% of long-haul flights will operate, though only 30% of short-haul flights are expected to operate with the help of aircraft leased from eight rival airlines.

“Tens of thousands of BA people stand ready to serve our passengers and BA will be flying and will continue to fly through these periods of industrial action,” Mr Walsh said.

He added he remained available for talks on reaching a “sensible” agreement, but said that BA must cut costs.

An offer they had put forward to the union, which had not been accepted, would be “formally withdrawn once industrial action commences”, Mr Walsh said.

Pay demand

The airline and the union held talks late into the night on Thursday and resumed discussions on Friday.

Mr Woodley had called on BA to put an earlier deal to end the strikes “back on the table” - a move he said would allow him to call off the strike while union members considered it.

That settlement offer had included commitments on working hours and annual pay rises in exchange for the cabin crew workers agreeing to BA’s planned £62.5m of cost cuts.

But after announcing that the strike would go ahead, Mr Woodley said that the airline “did not want to negotiate”.

UK government borrowing could be less than forecast this financial year after better-than-expected figures for February and revised January data.

The UK government borrowed £12.4bn in February, less than economists had expected, official figures have shown.

The figure for January was also revised sharply downwards, to £43m from £4.3bn.

Borrowing in the current financial year has now reached £131.9bn, but analysts say the full-year total may be less than the government’s £178bn forecast.

Until recently, most analysts thought the government’s borrowing forecast was too optimistic.

The Office for National Statistics said that the overall effect of the latest revisions to historical data for the year had cut overall borrowing for 2009/10 by £2.9bn.

Despite the revisions and February’s better-than-expected figure, government borrowing is still running at record highs for the year, partly due to reduced tax receipts because of slow economic growth.

‘Timely boost’

The borrowing figure for February was not as bad as some had feared, partly because of the rise in VAT at the beginning of this year and new taxes on bankers’ bonuses.

The government is also paying out slightly less in benefits because unemployment is falling.

“February’s public finances figures have provided [Chancellor] Alistair Darling with a very timely boost ahead of next Wednesday’s Budget,” said Jonathan Loynes at Capital Economics.

“The figures leave a total deficit for the first 11 months of the year of £132bn, suggesting that Mr Darling may now hit or even undershoot his full-year forecast.”

Howard Archer at IHS Global Insight agreed: “Mr Darling could significantly undershoot the £178bn public sector borrowing requirement that he forecast for 2009/2010 in last December’s pre-Budget report.”

Accountancy firm PricewaterhouseCoopers estimated that the budget deficit for the financial year would be £173bn, £5bn less than the government forecast.

Although the UK’s overall level of debt is similar to other major economies, it has increased its borrowing during the downturn at a much faster rate than its competitors.

Chancellor Alistair Darling has pledged to halve the budget deficit in percentage terms over the next four years, but argues that making cuts now could harm the UK’s recovery from recession.

On Wednesday, the European Union published a report saying that the government’s plans to cut the deficit are not ambitious enough.

EU rules say government deficits must be below 3% of GDP, but the UK’s deficit is expected to hit 12.6% of GDP this year.

The Conservatives also argue that cuts need to be made more quickly.

Burgeoning debt levels have also led to concerns in recent months that the UK could lose its AAA credit rating - reserved for the very safest borrowers.

However, earlier this week, Moody’s agency said the UK’s top rating was secure.

The European Union has criticised the UK and other European nations for having “optimistic” growth assumptions and bloated deficits.

The UK must tackle “uncertainty” in plans to cut its deficit, the EU said.

EU rules say government deficits must be below 3% of GDP, but the UK’s deficit is expected to hit £178bn - or 12.6% of GDP - this year.

Germany, France, Spain and Italy were also warned they were over-reliant on economic recovery to meet debt targets.

Brussels was commenting on plans by some of the biggest EU countries to bring down public spending.

‘Absence of detail’

As was reported earlier in the week, the report warned that the UK was not on course to cut its deficit in line with EU rules by a deadline of 2015.

“The absence of detailed departmental spending limits is a source of uncertainty,” the European Commission said.

The UK chancellor argues it has been right not to cut spending more quickly

In the run-up to next week’s Budget, UK chancellor Alistair Darling has defended the government’s approach to the deficit, arguing that cutting it too quickly by reducing government spending would risk harming the UK’s emergence from recession.

The shadow chancellor, George Osborne, said the report’s conclusions - that the government needed to cut spending more rapidly - were “a heavy blow for Gordon Brown’s credibility”.

One of the other countries criticised was Spain. The report said Spain’s forecast that it would cut its deficit to 3% of GDP in 2013 from 11.4% in 2009 was based on “markedly” optimistic growth forecasts.

The pace of bank restructuring in Spain, which the EU said posed a risk to growth, was also attacked as being too slow.