(Adds BA comment, fresh share price)
LONDON, Sept 18 (Reuters) - British Airways pilots have cancelled a strike set for Sept. 27 to create time for talks after 48 hours of industrial action earlier this month grounded 1,700 flights in a dispute over pay.
The pilot walkout - the first in the airline's history - was the latest high-profile setback for British Airways, and pilot union BALPA said it was time for "a period of reflection before ... irreparable damage is done to the brand."
"Someone has to take the initiative to sort out this dispute and with no sign of that from BA, the pilots have decided to take the responsible course," BALPA General Secretary Brian Strutton said in a statement.
"In a genuine attempt at establishing a time-out for common sense to prevail, we have lifted the threat of the strike on the 27th September."
No further strike dates have been scheduled, but the union said it retained the right to announce more.
BA has offered its pilots an 11.5% pay rise over three years, which it said would take the pay of its highest earning captains from 167,000 pounds ($208,450), plus 16,000 pounds in allowances, to just over 200,000 pounds.
BALPA wants the pay deal to include profit-sharing for BA pilots, who on average earn around 90,000 pounds a year.
IAG's shares rallied after BALPA cancelled the strike and closed 1.9% higher.
"We have just received this news. We are considering the implications and we will give updates in due course," British Airways said in a statement. (Reporting by Alistair Smout; editing by Stephen Addison)