TALKS to avoid a strike by ground staff at the region's largest airport during the peak holiday period ended in deadlock last night.

Up to 170 baggage handlers, check-in staff and despatchers at Newcastle Airport will vote within the next few days on whether to walk out after rejecting a three per cent pay offer.

If the workers, employed by Groundstar, agree to strike, flights in and out of Newcastle would be hit from Monday, August 18 - a week before the Bank Holiday.

August is traditionally the airport's busiest period, with 140,000 travellers expected through the doors, and bosses are already preparing to draft staff in from other airports to keep any delays to a minimum.

Meanwhile, the threat of further chaos for British Airways passengers ended last night after it settled its swipe-card dispute at Heathrow.

The breakthrough came following talks between the company and leaders of three unions in an attempt to avoid a repeat of wildcat strikes.

The agreement came 12 days after an unofficial walk-out by hundreds of check-in staff at Heathrow in protest at plans to impose a new electronic system for clocking in and out of work.

Under the deal, the new swipe card system will be introduced from September 1 although workers will be asked to use the system voluntarily before then.

The ground staff at Newcastle Airport, who handle services for airlines including British Airways and KLM, have been in pay talks with Groundstar management since April.

Graham Eastwood, regional organiser with the Transport and General Workers Union, said: "Our argument is not with the travelling public.

"Groundstar has got as much responsibility as us and if it wants to avoid this, it should come back with an improved offer."

The workers, who earn between £10,000 and £15,000 a year, were told by Groundstar that it only had enough money to offer a three per cent pay rise, he said.

But they reacted angrily as the company announced sales had soared by £5m and new contracts brought turnover to a record £40m.

The company also agreed a four per cent rise for ground staff at Stansted.

A Groundstar spokesman said: "Three per cent is extremely good, considering the downturn in the aviation sector.

"Negotiations are still at an early stage. The door is open and Groundstar is listening to the union."

Mike Luddy, marketing manager at Newcastle Airport, said contingency plans, including using staff from other airports, should keep disruption to a minimum.