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Iberia flies again - for now

Later, reports said the Spanish Government had ordered the two sides to negotiate an end to the dispute, using arbitrators whose decision they would be forced by law to accept.

The resumption of flights came after Iberia said it had received assurances from striking pilots that they were willing to return to work.

The shutdown came after 99 top-level pilots - nearly half the company's 208 pilots at that level - resigned.

The company said it had now received a letter of agreement from the pilots to continue working.

"The suspension is over and all flights are working normally," said an Iberia spokesman.

The dispute has hit the company as tourists from around the world head for summer holidays in Spain, which is among the world's top three tourist destinations.

The pilots' union, Sepla, and Iberia have been at loggerheads over pay and pensions for months.

Running strikes

The pilots called a series of one-day strikes throughout July and August.

The most recent one, on 10 July, forced Iberia to cancel 230 flights worldwide. Iberia schedules about 1,000 flights a day.

Iberia says that the pilots' pay demands amount to a 20% rise. The company said it refused to negotiate "under blackmail" of industrial action.

The pilots accuse the airline of violating a 1995 wage agreement under which they accepted pay cuts when the company was in difficulty.

British Airways and the Spanish bank Caja Madrid are among the Spanish airline's biggest shareholders.

The Iberia grounding follows a Spanish coach drivers' strike that caused chaos for tourists last month.