Business World
September 22, 2009
Rank-and-file Philippine Airlines (PAL) employees will seek the Labor department’s help to stop the Lucio C. Tan-led company’s plan to outsource non-core services, which they claim could leave as much as 4,000 jobless.
The PAL Employees’ Association (PALEA) will file a request for preventive mediation at the National Conciliation and Mediation Board (NCMB) today following a deadlock in discussions regarding moves to spin-off or outsource services of 10 PAL departments.
"We will formally forward the issue to the labor department to keep PAL from pushing through with its plan next month," PALEA president Edgardo C. Oredina said in an interview.
In a notice sent to PALEA on Sept. 9, PAL president Jaime J. Bautista told union officials that certain services needed to be outsourced or spun off "to prevent the company from incurring further losses and to preserve its remaining assets."
The services to be initially outsourced by Nov. 15 include catering, passenger handling, ramp handling, and cargo-handling operations, the notice obtained said.
PAL is also studying the possibility of outsourcing other functions like information technology, revenue accounting, reservations and call centers, as well as medical and other human resources operations.
"The initial wave will cover 80% of our 4,000 members. [If PAL pushes through with the second plan], it will wipe us all out," Mr. Oredina said.
A PAL official who requested anonymity meanwhile described the labor union’s move as "over-reacting" and "preempting the moves of the management."
"There is already an ongoing offer for all our employees to avail themselves of an early retirement package which will be completed by end of this month to achieve the reduction in the work force, to make PAL a lean and mean company," he said.
The official said there were no concrete plans beyond that, and that management would only decide on its next course of action if it fails to achieve the "ideal number of work force."
"PALEA is moving ahead of the management. It is unlikely that we will outsource all those departments because most of them have technical requirements that need experience and expertise. How can PAL work if we lose all of them?" he asked.
PAL has more than 8,000 employees, half of whom belong to the rank-and-file union.
But Mr. Oredina said PAL has yet to offer early retirement packages.
"As early as 2000, PAL has been wanting to retain only its core operations and employees, which are only the pilots and the flight attendants," Mr. Oredina said.
PAL was in a similar situation more than a decade ago at the height of the Asian financial crisis. Suffering from financial woes, PAL was forced to cut flights and retrench thousands of employees, which was subsequently declared illegal by the Supreme Court.
In 1998, PAL was forced go into receivership in the aftermath of the Asian crisis. It returned to profit in 2000 and was declared in financial health two years ago.
For the fiscal year ending March, PAL lost $301.4 million as a result of higher expenses brought about by the cost of operating more flights and last year’s record-high fuel prices.
Revenues went up slightly to $1.6 billion but were not enough to cover operating expenses of $1.9 billion, up from $1.539 billion the previous year. Total liabilities also went up by almost a fifth to $869 million.
Burdened with debt and ballooning costs, the company is now looking at various options, including selling aircraft, reducing flights, and letting go of employees. It is also on lookout for potential white knights who can ease its financial woes.
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