PAL Offers P477-M Shares to Employees, Unions

Isyu

Thursday, October 31, 1996

Money

PHILIPPINE Airlines has announced the offering of company stocks, worth P477 million, to its employees in fulfillment of an earlier commitment to make them part-owners of the company.

The stock offering is also considered to partially meet the cash components of economic benefits being demanded by the three unions in PAL under separate collective bargaining agreements with the management.

Jose Antonio Garcia, PAL President and Chief Operating Officer, told a press conference at the PAL executive offices at Allied Bank Center in Makati that the unsubscribed shares will be made available to employees and the union at P5 per share.

He said management could only offer these shares at this time due to the previously unresolved shareholders representation issue. A recent favorable development for the stock offering was the waiver by government financial institutions with minority interests in PAL of their right to subscribe to the new PAL shares. The airline's stockholders during the last annual meeting unanimously approved the increase in capitalization from P5 billion to P10 billion. This paved the way for the Lucio Tan group to be the controlling shareholders of PAL.

Garcia said the PAL Board of Directors agreed to the stock offering to partially defray the cost of labor demands for more benefits in spite of company losses.

In particular, the stock offering is an effort by PAL management to address the demands of the PAL Employees' Association (Palea) and the two other unions—Airline Pilots Association of the Philippines (Alpap) and Flight Attendants and Stewards Association of the Philippines (Fasap).

Palea's demand amounts to an additional P3.2 billion over a two-year period. Palea has threatened to strike unless their demands are met.

The strike threat was posed despite stern warning from the Department of Labor and Employment (DOLE) in two assumption orders issued on October 18 and 24, enjoining the union to cease and desist from committing any acts that will exacerbate the situation.

The DOLE'S National Conciliation and Mediation Board considered the new issues raised by Palea as mere grievances that can be resolved under the grievance machinery of the CBA.

Garcia explained that when Palea filed a Notice of Strike on October 4, the issue strayed from the CBA and shifted instead to the position of the 40 union officers dismissed by management for leading a wild-cat strike in 1994, declared illegal by the DOLE.

Although dismissed from the company, the 40 unionists still wield strong influence on the union and union policies by their majority in the 21-member Palea board.

Their position, along with those of 141 unionists temporarily reinstated, is pending before the Supreme Court.