PAL to push spin-off of non-core services

By Mary Ann LL. Reyes (The Philippine Star) Updated September 23, 2010

(PAL) emphasized yesterday that the move to spin-off some of its non-core units was necessary to allow the flag carrier to survive amidst several factors that have made it difficult for it to compete.
In a statement, PAL cited the massive $312 million losses suffered by the company in the last two years due to the global recession as well as the high fuel costs as some of the reasons why it had to save on costs.

It also blamed the decision of the US Federal Aviation Administration (FAA) to downgrade the Philippines from Category 1 to 2, disallowing PAL from mounting additional flights to the US or to even use brand new and more fuel-efficient aircraft, and the significant safety concerns raised against Philippine civil aviation authorities that led to the European Union’s ban of all Philippine carriers.
 In addition, PAL said global pandemics like SARS and avian flu, as well as cut-throat competition from budget carriers had made the business environment more difficult.

“Taken together, all these factors have made it very difficult for PAL to compete. It must save on costs in order to survive, hence the decision to spin-off,” it emphasized.

Company officials emphasized that while there is a noticeable increase in travel in recent months and a better income forecast by the International Air Transport Association (IATA), it does not mean that PAL is out of the woods. “To remain competitive in the future, it must strictly adhere to a survival plan that includes the spin-off of three non-core units,” they said.

PAL also stressed that the Department of Labor and Employment (DOLE) has recognized and upheld the justifications cited by PAL as valid grounds for the spinoff.

“We are hopeful that DOLE will affirm its earlier decision recognizing management’s prerogative to spin off non-core units. After all, PAL has fully complied with all the requirements of the Labor Code pertaining to the decision to close our three non-core units,” it said.

PAL likewise maintained that the best venue to discuss all labor-related issues, including the retirement age fall within the ambit and jurisdiction of the DOLE.

It said that since the retirement age can be set by agreement, it is PAL’s position that the retirement age of its cabin crew as contained in its collective bargaining agreement with the Flight Attendants and Stewards Association of the Philippines (FASAP) is valid and legal. “It may be subject to negotiation but it is certainly not illegal nor immoral as FASAP suggests,” the company emphasized.
Officials pointed out that nobody is forcing FASAP members to retire at 40. “It is simply contained in the contract that FASAP signed in 1996 and 2000. Since FASAP feels it is unfair, the current conciliation meetings in DOLE is the proper venue to resolve it. Bringing the issue to the Commission on Human Rights (CHR), the streets or any other venue, to our mind, is simple forum shopping,” they said.

They added that since it was FASAP who brought the issues of unfair labor practices before the DOLE when they filed a notice of strike, it must give DOLE the due respect it deserves rather than going to multiple venues to seek redress.

Earlier, PAL said that the complaint filed by FASAP before the CHR smacks of forum shopping and that it shows disrespect and a disturbing lack of confidence in the ongoing mediation hearings at the DOLE.

FASAP earlier filed a notice of strike before DOLE alleging violations of workers’ rights, ranging from maternity benefits, retirement age and pay. “Since DOLE has primary jurisdiction over these labor issues, PAL believes that the labor department is the proper venue to discuss and resolve them,” the company said.

PAL said it hopes the CHR will allow DOLE to perform its functions in accordance with law, adding that it hopes the CHR will be fair and impartial in handling this case, especially since current CHR chairperson Loretta Ann Rosales has publicly taken a position on the PAL-FASAP issue even before she was appointed to head the commission.

According to the air carrier, it was President Aquino no less who instructed DOLE to take the lead in resolving FASAP’s labor row with PAL management.

“But by using multiple venues, FASAP seems to be putting the President and DOLE in a straightjacket. It wants to show that it can choose a forum where it hopes to get a favorable decision. We maintain that in PAL, no workers’ rights have been trampled upon. Whatever salaries and benefits FASAP members enjoy are all contained in the current CBA,” PAL said.

It emphasized that a CBA is a contract between two consenting parties and that it is mutually agreed upon through serious deliberation and negotiation, with careful thought and aid of counsel.

“FASAP, as a collegial body, entered into a CBA with PAL management not once but several times in the past. It must be stressed that all previous CBAs were decided not by a few but ratified by all members of the cabin crew union,” it added.