Strong Opposition Greets PAL Rehab Plan

Filipino Monitor

December 10-23, 1998

Business News

MANILA – The Philippine Airlines (PAL) management's formal submission of a proposed rehabilitation plan at the Securities and Exchange Commission (SEC) has been met with strong opposition.

Members of the Bagong Alyansang Makabayan (Bayan), the Kilusang Mayo Uno (KMU), PAL Employees' Association (PALEA), and the Airline Pilots Association of the Philippines (ALPAP) have staged a rally in front of the SEC building protesting what they call was a “devious plan to dismiss workers and abandon its non-profit services to the Filipino public."

According to Bayan, PAL's rehab plan does not only concern workers alone. "Because aside from massive layoffs and anti-labor practices, PAL also wants to discontinue non-profitable flights to certain provinces and cities and restructure fare rates. It will have far-reaching consequences for the economy," said Teodoro Casiño, Bayan deputy secretary general.

“The withdrawal of PAL from these routes should not be simplistically viewed as a way to save PAL. Government should consider the losses from the forward and backward linkages PAL has created with other industries," he added.

PAL aims at boosting revenues to $855 million by year 2003 by cutting down employment with only 22 aircraft. It will focus on international flights, particularly Japan and U.S. routes, and cease operating unprofitable domestic routes such as Batanes and Baguio.

From 14,000 employees, PAL slashed its workforce down to 9,000. Under the rehab plan, PAL wants to cut it down further to 7,500, but according to a primer released by PALEA, PAL's original target was 3,500.

Casiño said the rehab plan have negative effects on local industries on PAL for transportation of their goods and communication.

"There are no other airlines interested in servicing these so-called 'missionary routes.' With the adoption of the 'open skies' policy, most airlines jumped on profitable routes," he said.

The government failed to direct the airline industry towards the needs of the economy and the people and airline firms in turn, refused to recognize these needs. The search for quick and easy profit is what guides investments in the airline industry," said Casiño.