PAL's Predicament

Money Asia

Tuesday, November 5, 1996

From the Trading Floor

By LAZARO E. MEDINA JR.

PHILIPPINE Airlines probably holds the unenviable distinction of being the only Asian airline that has been losing money for more than 10 years. PAL officials estimate that the national flag-carrier has piled up losses of P10.7 billion from 1984 to 1995.To date, the financial hemorrhaging has not abated much as the airline continues to cough up an estimated P3 million in daily losses.

The reasons for all the red ink are manifold, but the major ones include PAL's inefficiency and a bloated workforce compared with other airlines of its size. With its current personnel complement of some 14,000, PAL is, by international standards, grossly overstaffed. According to aviation executives, foreign airlines comparable with PAL in size of fleet and routes have workforce of less than half or even a third that of the country's flag-carrier.

The presence of strong unions in PAL makes it difficult for the new management under Chinese-Filipino taipan Lucio Tan, which incidentally took control only about 18 months ago, to institute the desired changes in PAL.

What happened during the four-day strike in the national flag-carrier perhaps demonstrate the kind of labor problems management is up against. The 9,000 strong Philippine Airlines Employees' Association (PALEA) may have exacted its pound of flesh for the financially bleeding airline, but at what cost? At the great inconvenience of the air-traveling public at a time when most passengers wanted to be home to pay respects to their dead for Todos los Santos and All Souls Day, two very important holidays in the country.

In other unprofitable airline companies — including major American carriers Northwest, Trans World Airlines and Continental Airlines — the employees have voluntarily taken cutbacks in salary and in some of their benefits to help their employers stay afloat. At PAL, according to PAL president Jose "Pepeton" Garcia, management is not asking for a similar sacrifice; it just wants the employees to be "more patient" as the company struggles to regain profitability.

By striking at such a crucial time, the ground personnel and mechanics belonging to PALEA succeeded not only in embarrassing PAL management. They embarrassed themselves even more for their class materialism and gross disregard for the interest of travelers whose patronage is their source of income and livelihood.