PAL Offers Employees Board Seats

The Manila Times
Saturday, September 2, 1998

Financially-Troubled Philippine Airlines Inc. (PAL) yesterday said management has agreed to give employees a 20 percent stake, equivalent to three seats on the 15-man board.

In return, PAL Employees’ Association (PALEA), which represents the airline’s ground crew agreed to suspend its collective bargaining agreements with management.

“PAL Chairman Lucio Tan agreed to transfer approximately 30 percent of his group’s holdings, equivalent to about 20 percent of PAL’s equity, to employees’ control and cede three board seats to union representatives,” the PAL statement said.

The deal was finalized early yesterday morning after weeks of negotiations, with the help of the government.

“Tan’s offer, which is unprecedented in Philippine labor relations, allows PAL employees a personal stake and direct participation in charting the future of the airline,” the statement said.

The moratorium on labor bargaining was a key condition required by creditors to ensure uninterrupted industrial peace while the airline tackled its various problems, PAL said.

10-year moratorium

The airline, hammered by falling demand as a result of the Asian financial crisis, was forced to seek relief on its $2.0 billion debt after its 600 pilots went on a 22-day strike in June.

“We presented a proposal to the union for a 10-year suspension of the collective bargaining agreement in exchange for broad seats and 60,000 shares per employee, three board seats for all the unions,” Manolo Aquino, Executive Vice President for administration and services told Reuters.

“Certainly, this agreement with Palea will enhance the success of the rehabilitation plan and its approval by the creditors. It adds value to the airline given that industrial peace will be observed during the 10-year period,” Aquino said.

Apart from Palea, the other airline unions are the pilots and flight attendants groups.

Aquino said Palea members and other unions would still need to approve the plan.

PAL posted a record loss of P8.08 billion in the fiscal year ending March 1998, compared with a P2.5 billion loss the previous year.

In the first quarter to end June 1998, its net loss was P2.21 billion from the year-earlier loss P503 million. –Reuters