KLM pilots threaten legal action over pension demands

AMSTERDAM, Aug 10 (Reuters) - A pilots' union at the Dutch arm of airline Air France KLM said on Wednesday it is prepared to sue the carrier if its demands for renewed talks on pension rises are not met.

Europe's fifth-largest airline group has already faced industrial action by pilots and cabin crew at Air France (Paris: FR0000031122 - news) and strike threats from ground staff and cabin crew at the Dutch unit.

The Dutch Airline Pilots Association, which represents 98 percent of KLM (Shanghai: 600686.SS - news) 's pilots, accuses KLM of reneging on a commitment made in a collective bargaining agreement to increase pension entitlements in line with inflation.

KLM told the union the 600 million euro ($668.70 million) cost of this was needed for other investments.

"We admit that there are problems and we are prepared to talk," a union official told Reuters, confirming an earlier report in De Telegraaf newspaper, but said talks could only begin if KLM went back on its "unilateral" scrapping of indexation.

"Right now, they want us to take a slap and then discuss things with them constructively," the official said. The union has given KLM an ultimatum to restore indexation by Friday.

Air France KLM has faced industrial action and employee dissatisfaction as it struggles to bring down costs in the face of competition from European budget airlines and Middle Eastern carriers.

A strike by pilots at Air France in June cost the company 40 million euros, the company said, while a mooted week-long cabin crew strike would cost it 90 million euros.

The union official said there were no plans for KLM pilots to strike.

The airline last week obtained an injunction preventing baggage handlers in the Netherlands from launching a 90-minute strike.

The carrier's rivals have also faced challenges, with Germany's Lufthansa reporting a fall in bookings in response to attacks in Europe and British Airways owner IAG trimming growth plans after Britain's vote to leave the European Union.

($1 = 0.8973 euros) (Reporting by Thomas Escritt; editing by Jason Neely)