British Airways’ cabin crew began voting today over Christmas strike action in protest against new employment rules that include a two-year pay freeze, reduced holidays and fewer benefits. The ballot, which is open to all BA’s 14,000 cabin crew, closes on December 14 and could result in industrial action starting 21 December.

Under the new rules, more than 3,000 crew will shift to part-time contracts, 1,000 will take voluntary redundancy, whilst new recruits will not receive fewer long-haul allowances.

Today’s vote follows last week’s announcement that BA will merge with Spain’s Iberia.

The worker’s union Unite has said that it will not back the proposed merger unless it is assured that there will be no more job losses.

Cost-cutting is one of the main reasons behind the £4.5 billion merger between the two loss-making airlines. It will create Europe’s largest airline by passenger numbers, carrying 62 million people a year.

Iberia has proposed a hiring freeze until 2012, a two-year salary freeze and early retirement for cabin crew over 55. Spanish unions have threatened strike action over the proposals and are demanding a 4 per cent pay rise.

BA and Iberia will continue to operate as separate airlines under TopCo, a holding company incorporated in Spain but have its headquarters and stock market listing in London.

The combined company will be chaired by Antonio Vázquez, the chairman and chief executive of Iberia. BA shareholders will own 55 per cent with the remainder held by Iberia investors. Walsh will lead the merged company.

However the merger is by no means a done deal. The main obstacle remains BA’s £3 billion pension fund deficit, and Iberia has a get-out clause if BA cannot reach agreement on how to finance the deficit.