PAL's Low Pay Not A Reason to Strike

Malaya

Tuesday, November 5, 1996

Business Insight

By JAKE MACASAET

IT could very well be true that employees and even officials of Philippine Airlines have the lowest pay among airline companies in the Southeast Asian region. It is just as true that among airlines of similar size, PAL has the largest work force of about 14,000 people. It is precisely the bloated payroll cost and the small and inefficient fleet of aircraft that have been draining the coffers of the national flag carrier. As a wholly-owned government corporation, PAL never really had a chance to be competitive. Not until it was privatized in early 1992. But even the transfer of 67 percent control to the private sector did not have an immediate impact on the finances of PAL. A feud among the stockholders of PR Holdings which bought 67 percent control delayed the reflecting program for almost four years.

It was only after President Ramos, realizing that allowing the feud to drag on would completely run the airline to the ground by the time he bows out of office in 1998, allowed the group of Lucio Tan to acquire 56 percent control that an expensive $3-billion refleeting program was finally put in place. The President facilitated the transfer of control by not allowing the state and three of its financial institutions to subscribe to the P5 billion new capital that the Tan group had always demanded as the only way to put the airline back on its feet. After all, the Tan group earlier acquired 50.03 percent of PR Holdings which earlier bought 67 percent of the airline. The tenuous control of the holding company brought about suits and counter-suits related to the dissolution of PR Holdings and the opposition of other stockholders to the capital increase. A presidential order put all that trouble on ice. PAL is supposed to be on the way to full rehabilitation. And it is.

Now come the members of the PALEA (PAL Employees' Association) calling a strike in violation of the assumption of jurisdiction over the dispute by the Department of Labor as early as Oct. 4, 1996. Among the unreasonable demands are a P5,000 monthly pay increase and a 150 percent Christmas bonus. Even more unreasonable, if not downright silly, is the demand for a one-day leave with pay for women on their first day of menstrual cycle. That means women who still go through the cycle are given the class privilege of getting 12 extra days a year with pay. Women on menopause are denied the privilege.

The strike at Philippine Airlines demonstrates once again the lack of discipline of Philippine organized labor and its inability or refusal to understand company financial problems.

There should be a law that prohibits a company from giving to its employees under threat of a strike what it does not have. PAL is saddled with maturing and long-term debts. As earlier stated, it continues to suffer losses at the rate of P2 billion a year for the past two years. It would take at least three more years and $3 billion to put PAL on its feet with a massive refleeting program that requires the purchase of 37 new and bigger aircraft. What reason would there be for the owners or management of PAL to borrow money for additional benefits of the employees? And they want the pay increase to retroact to 1991. As it is, PAL is able to borrow money from foreign and domestic banks not on its financial strength which it does not have, but on the word of Lucio Tan and nothing else. The man, it must be reiterated, has guaranteed the obligations of PAL through his Fortune Tobacco and Asia Brewery. If PAL does not make the profits it expects from modernization program, its creditors could very well drain the finances of Fortune and Asia Brewery as guarantors.

If the present management group did not have the welfare of the employees at heart, it could have reduced their number by at least 50 percent on the simple and valid argument that many of them have become redundant. With the $3-billion refleeting program, all of them will have work to do. When the airline starts making money, it would be time to demand bigger salaries and benefits. But not before then. The striking union knows only too well that Singapore Airlines has only around 9,000 people in its payroll but they produce three times more revenues than PAL. Their pay is naturally higher.

In the 55-year history of the national flag carrier, no stockholder, not even the national government, has taken the risks that Lucio Tan has. As a controlling stockholder, Tan is now running PAL as a private enterprise. Many of the employees abhor the idea. They are so used to working for PAL as a government corporation. Like the rest of government corporations, the national flag carrier has a bloated work force of 14,000. The private controlling stockholders are not furloughing any of them. They will stay and get more benefits when the full effects of the refleeting program begin to tell on the bottom line. That's going to take at least two to three years. Not too long a time to wait considering that many of them has been with the airline for 10 to 20 years. And their lot did not improve.