PAL decides to close on Sept. 23

Manila Bulletin
Friday, September 18, 1998
Jim Gomez

MANILA — Strike-ravaged Philippine Airlines announced Thursday it will halt operations next week, ending the 57-year history of Asia's oldest airline.

Airline officials said efforts to rebuild the ailing carrier were no longer feasible following a decision by its largest union to reject a proposal aimed at helping the company survive.

"We're going to close. It's final," PAL vice president Rolando Estabillo said.

He said the closure was approved by the airline's board and will be effective at midnight next Wednesday (Sept. 23).

The shutdown of the Philippines' largest airline would leave the country with only a handful of very small carriers, most with severe economic or operating problems of their own.

"It is not easy to preside over the demise of a great Filipino institution that has been a partner in nation building for over half a century," PAL said in a statement.

"Sadly, our sincere efforts to keep PAL flying and serve the riding public have not been matched by a similar commitment from our employees' unions," it said.

President Estrada called management and union officials of Philippine Airlines (PAL) to an emergency meeting last night at Malacañang in an effort to thwart a threat of PAL to close down the nation's flag carrier starting midnight of Sept 23.

The President, expressing his concern over the PAL threat of closure and moving to safeguard national interest, directed Labor Secretary Bienvenido Laguesma to bring together the airline's opposing parties to the negotiating table again with the President himself presiding.

Tan is estimated to have a 70 percent stake in PAL, while the government owns about 18 percent.

On Wednesday, the board of the PAL Employees Association (PALEA), which represents ground staff, reversed an earlier decision and rejected the proposal offered by Tan.

The offer would have given workers three board seats and PAL stocks in exchange for a 10-year suspension of their collective bargaining agreement.

Union vice president Gerardo Rivera said the board rejected the airline's proposal because "we cannot just wholesale surrender our right to collective bargaining."

"We will all suffer because of this, most especially the workers," he said of the decision to shut the airline.
Under the proposal, Tan offered to give 20 percent ownership of the company to its employees, with each employee receiving 60,000 shares of stock worth P 300,000.

The company also pledged to refrain from cutting salaries and to rehire many retrenched workers.
In June, PAL cut most of its routes, laid off 5,000 of its 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 added travails of Asia's currency crisis.

The airline has debts of $2.1 billion to local and foreign creditors, but had secured a debt moratorium while a survival plan was considered by regulators and creditors.

PAL officials said creditors refused to agree to the restructuring plan unless new capital is infused into the airline.@