It’s final: Goodbye PAL

Manila Standard
Friday, September 18, 1998
Fel V. Maragay, Angie M. Rosales

Strike-ravaged Philippine Airlines (PAL) announced yesterday it will shut down next week, after its workers’ union rejected its offer of three board seats and stock ownership in exchange for a 10-year moratorium on collective bargaining agreement (CBA).

But Malacañang has intervened and appeared determined to stave off the end of the 57-year history of Asia's oldest airline.

President's appeal
"I am appealing to them (PALEA) and the management," President Joseph Estrada said last night. "This will affect not only PAL but also the whole country and several thousands of employees, who are not directly employed by PAL."

After a marathon meeting at the palace last night with President Estrada, PALEA officers stood pat on their decision, and stressed that the right to collective bargaining a resident cannot be abrogated for 10 years.

The 10-year moratorium on the CBA “is a condition imposed by new investors who wanted to help in the rehabilitation of PAL," pointed out Executive Secretary Ronaldo Zamora.

Former Rep. Edcel Lagman, acting legal adviser of PALEA, suggested that PAL investors should modify this condition. "I hope the investors will see the necessity of observing the laws of the land which does not sanction the abrogation of CBA for a period of 10 years.”

Softened stand
PALEA vice president Gerry Rivera however, seemed to have softened his stand. He said the union was seeking a middle ground on the 10-year moratorium on the CBA.

But whether it is 10 years or less, President Estrada wanted that the decision should come from the union members.

He said he was trying to convince the PALEA offices to agree to the submission of the compromise agreement to a referendum of union members.

President Estrada said PALEA agreed to resume their meeting on Monday.

He said he would call up Mr. Lucio Tan, chairman of PAL, today to a meeting and try to persuade him to continue operating lines of communication with the labor union.

Closure OKd by board
Earlier, PAL issued a statement on the inevitability of ending its 57 years history.
“We’re going to close. It’s final,” PAL vice president Rolando Estabillo said.
He said the closure was approved by the board and will be effective at midnight next Wednesday.

PAL’s closure would leave the Philippines with only a handful of very small airlines, most with severe economic or operating problems of their own.

On Wednesday the board of PALEA which represents ground staff reserved an earlier decision and rejected the proposal of Tan.

Tan offered to give 20 percent ownership of the company to its employees with each employee receiving 60,000 shares of stock, which is worth P300,000 as of yesterday.

The company also pledged to refrain from cutting salaries and to rehire retrenched union members who have not received separation pay.

After learning of the union’s decision to go back on the agreement, Tan called an emergency board meeting at the PAL headquarters in Makati apparently to inform them of his decision to shut down the airline.

“Wala na, wala na, sara na. Ayaw nila e (No more. They don’t want it any more),” Tan told reporters before the board meeting began.

Renegotiation
A PAL statement said the closure was recommended by an interim receivership committee to the airline’s board during the meeting.

But Labor Secretary Bienvenido Laguesma said he will insist on a renegotiation between management and labor to save the company.

Laguesma noted that the department has not yet received a formal notice of closure from PAL management. He hinted at the possibility that the airline may not have to be shut down.

In June, PAL cut most of its routes, laid off 5,000 of more than 13,000 workers, and said it would dispose of most of its 54 planes in response to a crippling 22-day pilots’ strike, and the impact of Asia`s currency crisis.

The airlines is mired in debts to local and foreign creditors totaling $2.1 billion, but has secured a debt moratorium while a survival plan is considered by the Securities and Exchange Commission and creditors.

Labor disputes

A senior PAL official who spoke on condition of anonymity said creditors have refused to agree to the restructuring plan unless new capital is infused into the airline, but prospective investors have been driven away by recurring labor disputes, he said.

The airline lost P2.2 billion between April and June, mainly because of work stoppages.
The PAL official said the airline’s liabilities now almost equal its assets, and the company was losing between P40 million and P60 million a day.

A Palace source said PAL has total assets worth P94 billion. The government, which used to own PAL, remains a minority stockholder in the airline.

PAL’s first flight was on March 15, 1941 when a Beech Model 18 aircraft carried five passengers from Manila to Baguio, making it Asia’s first airline. On July 31, 1946 it became the first Asian carrier to cross the Pacific.@