British Airways says the proposed pay deal is "reasonable"

Operations director Mike Street tried to explain to workers why the company could not afford a bigger pay rise.

The GMB union announced last week that its members - including check-in staff and baggage handlers - were to be balloted on strike action.

Unions and management are holding pay talks at conciliation service ACAS.

The result of the ballot, involving members based mainly at Heathrow and Gatwick, will be announced in August.

The union said earlier strikes would bring those and other major airports to a halt "almost instantly".

'Low paid'

Workers had earlier overwhelmingly rejected a three-year pay deal worth 8.5% over three years, or 10.5% if the money did not count towards pensions.

But Mr Street said in his letter that a deficit in the pension fund had resulted in contributions rising by �133m per year, said BBC labour affairs correspondent Stephen Cape.

Mr Street said it was not a short term problem that could be fixed by a rise in the stock market, said our correspondent.

The letter added that revenue was only expected to grow by 2-3% and efforts were continuing to control costs.

A spokesman for the GMB said that after months of delays "BA seemed unable to accept a resolution could be achieved".

He said a "decent pay offer for decent, hard-working low paid staff was wholly possible".

Last week the GMB described the workers as "the people who keep BA flying", and said there was money "sloshing around at BA for the board, managers and pilots".

The collapse in negotiations came after a two-week "cooling period" aimed at resolving the dispute affecting around 8,000 workers at UK airports.

There was serious disruption at Heathrow airport last summer when check-in workers staged an unofficial walkout.

That dispute concerned a row over working conditions, including the use of swipe cards to clock in and out of work.