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URGENT: Video shows beheading of second American journalist

DUBAI (Reuters) - The Islamic State militant group released a video purporting to show the beheading of U.S. hostage Steven Sotloff, the SITE monitoring service reported on Tuesday. A masked figure in the video also issued a threat against a British hostage, a man the group named as David Haines, and warned governments to back off "this evil alliance of America against the Islamic State", the monitoring service said. (Reporting by William Maclean, Editing by Angus MacSwan)

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New York City school bus strike ends

By Barbara Goldberg

NEW YORK (Reuters) - A strike by New York City school bus drivers ended on Friday, capping a five-week-long transit nightmare for 152,000 students in the largest public school system in the United States.

Students will get back on the yellow buses when classes resume on Wednesday following a February break cut short to make up for school days lost during Hurricane Sandy.

Deciding to end the first bus driver strike in 34 years, the Amalgamated Transit Union appeared to hand a victory to Mayor Michael Bloomberg, who refused to give in to demands for job security and instead sought new, less expensive contracts for routes, many of them serving children with special needs.

Only 152,000 of the city's 1.1 million public school children ride yellow buses.

"Yesterday, I urged the union leaders to end the strike and made clear that the City would not be held hostage. Tonight, they agreed," Bloomberg said in a statement.

Union leader Michael Cordiello said the strike's end was prompted less by the mayor and more by a letter from several candidates who hope to succeed him next year. In the letter, the candidates held out the promise that if elected, they would revisit the job security issue.

"Our bus drivers and matrons look forward to getting back to work and doing the important job of safely transporting the students, who are like our own children, to and from school each day," Cordiello said in a statement.

During the strike, students received free subway passes and reimbursement for taxi fares from the city but travel complications especially in wintry weather resulted in school absences for some students and missed work days for their parents.

Bloomberg has said the city has no choice but to seek alternatives because it pays $1.1 billion a year to school-bus contractors, roughly $6,900 for each student - more than any other U.S. city. Los Angeles, which pays the next highest rate, spends $3,100 for each student, Bloomberg said.

The city has already begun to look for a more cost-efficient solution.

"Earlier this week, the City accepted the first bids on school bus contracts in more than 30 years, with the potential to cut costs, transfer the savings to classrooms and secure quality service from certified drivers and matrons for our students," New York City Schools Chancellor Dennis Walcott said.

Contracts to provide school bus services had not been renegotiated in more than three decades before the city began seeking competitive bids in December.

Last year, a re-bidding of pre-kindergarten bus contracts, a much smaller system, ended up saving the city $95 million over five years, the officials said. New York City bus drivers last went on strike in 1979. The strike lasted three months.

(Editing by Cynthia Johnston and Mohammad Zargham)

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