PAL Needs $230 Million a Year to Survive, Stay in Operations

By EMMIE V. ABADILLA
September 27, 2010, 7:02pm
Manila Bulletin

MANILA, Philippines – Philippine Airlines (PAL) needs US$230 million yearly, half of which must come from cost savings, the rest from sales and marketing. Hence, the flag carrier has to reduce its manpower and spin-off of non-core units in order to survive, stressed PAL spokesperson Cielo Villaluna.

Following huge losses due to the global recession and other factors beyond PAL's control, all of the airline's departments have to be more cost-efficient. Funds saved from belt tightening efforts are earmarked for payment of maturing dollar obligations, fuel costs, salaries, aircraft maintenance and other expenses.

Cabin crew reduction is just one of many cost-cutting measures, she pointed out. "The cabin crew union demands that funds saved from manpower reduction should be equally divided among them. But this, unfortunately, is not the aim of the whole exercise. If we heed their call to give them the savings, we may have satisfied crew members today but no airline to speak of in the long term."

Last July, cabin crew complement in PAL’s Boeing 747 aircraft was reduced to 16 from 18. However, this is still one crew higher than the minimum safety requirement of 15 crews for a B747 as mandated by international safety standards and by the Civil Aviation Authority of the Philippines, according to Villaluna.

Since the program’s start last July 1, PAL’s Cabin Services Department has not received any complaints about service quality, proof that the airline’s dedicated staff have been able to meet passenger expectations despite the reduced 'manning' complement.

“Contrary to the cabin crew union’s claim, there has been no diminution of employee rights or benefits. They work a little bit more for the same pay, which simply means more efficiency,” she noted. "Estimated savings from crew reduction as measured by our Cabin Services is about P70 million a year, not P141-million as claimed by the Flight Attendants' and Stewards' Association of the Philippines."

Most global airlines are still recovering from the global recession that caused a slowdown in travel. PAL is not alone in efforts to cut costs to be more efficient, the flag carrier’s spokesperson reiterated.

Despite better-than-expected passenger traffic in the first semester, PAL is still strictly adhering to its survival plan that was crafted after the airline lost more than US$312 million in the last two years. "The survival plan became imperative especially after the airline's equity dipped to just over US$1 million in February 2010," she explained.

“Programs like crew reduction are being implemented as a management prerogative. We informed the crew union beforehand as a matter of professional courtesy,” Villaluna went on.