PAL Union Members Have Yet to Ratify Tentative Accord

Cebu Daily News
Sunday, September 13, 1998

MANILA — Union members of Philippine Airlines must ratify a tentative accord to save the ailing airline, including a provision which suspends their collective bargaining agreement for 10 years, a union official said yesterday.

On Friday, PAL Chairman and majority owner Lucio Tan agreed to give 20 percent ownership of the company to its employees as part of the deal. Under the proposed agreement, employees will also get three seats on the airline's 15-member board of directors.

Each employee will receive 60,000 shares of stock worth P300, 000 (about $6,896) from the Tan group's shareholdings in PAL.

However, they will not be allowed to dispose of or sell their shares until their retirement, the airline said.

The accord commits the company to refrain from cuts in salaries and medical benefits, and retrenched union members who have not received separation pay will be rehired, the airline said.

A majority of the 21 board members of the PAL Employees’ Association, which represents ground crew workers, have voted to accept the proposal.

The same offer was made by PAL to the flight attendants' and the pilots' unions, but there was no immediate response from either group.

Alex Barrientos, President of the ground crew union, said the agreement would have to be ratified by a majority of his union members in a vote next week.

"Employees would take the risk of letting PAL survive by supporting the programs of the company," he said in explaining why union leaders accepted the offer.

He said company officials assured them their union would still be recognized, but he warned Tan not to trick them.

The airline said last week it lost P2.2 billion ($51 million) in the first quarter of the fiscal year beginning April 1, mainly because of work stoppages.

A 22-day pilots' strike in June caused the heaviest damage causing revenue losses of about P200 million ($4.6 million) a day, PAL said.

The airline said its losses also rose because of soaring dollar-denominated payments and continuing lease payments on unused planes which have not yet been returned.

In the previous fiscal year, the carrier reported a loss of P8.08 billion ($185 million).
PAL is seeking to restructure its debts and has obtained permission to suspend payments to domestic and international creditors amounting to $2.1 billion while it prepares a rehabilitation plan.

The plan includes the disposal of most of the airline's planes and a sharp reduction of flights.

The suspension of the collective bargaining agreement was also a key condition required by the airline's creditors, PAL said.

Barrientos, however, said there was "no assurance" that the airline would survive even if all the unions support the deal. (AP)