Sunday, 31 October 2010 12:06 Recto Mercene / Reporter
Business Mirror
THE labor department has affirmed the Philippine Airlines’ prerogative to spin off three noncore business units that may result in the layoff of some 2,600 rank and file workers.
Labor Secretary Rosalinda Baldoz, in affirming the spinoff of the three PAL units said that, “if there is no spinoff, PAL will close down and 7,500 workers will be displaced without separation pay, not to mention its adverse effects on PAL’s shareholders, the riding public and public interest.”
PAL welcomed the decision of Baldoz’s decision.
In a statement, PAL spokesman Cielo Villaluna said the spinoff means that the flag carrier will sell noncore units specifically its In-Flight Catering, Airport Services and Call Center units.
“Most airlines in the world, and almost all carriers in Asia, are now using third parties to supply and render noncore services. In PAL’s case, it is implementing the spinoff to cut costs and ensure the airline’s continued survival,” she said.
From the start, Villaluna stressed, the PAL management has maintained that the planned spinoff was done in good faith and justified by management’s prerogative to reorganize its corporate structure for the viability of its operations.
She said the PAL union had been aware of the planned spinoff since 1998, but it was deferred as PAL chairman Lucio Tan tried to make PAL profitable amid the difficult operating environment. So far only PAL’s Maintenance and Engineering department was spun off and bought by Lufthansa Technik Philippines in 2000.
She explained that a host of factors that include a massive $312-million loss in the last two years owing to the global recession, volatile fuel prices, the US Federal Aviation Administration’s downgrade of the Philippines’ aviation-safety rating to Category 2, cut-throat competition with low-cost carriers and other issues, forced PAL to find and implement radical ways to survive.
“Despite the implementation of major cost-control strategies and cash-generation initiatives, PAL was still way short of its goal to keep the company afloat. Hence, PAL crafted a comprehensive plan which includes restructuring and spin- off as key initiatives for survival,” she said.
She assured that those to be affected by the spinoff will receive separation pay and other benefits apart from the opportunity to work with the new service providers if they so desire. “Workers in other industries are not as lucky,” she said.
This developed as the Philippine Airlines Employees’ Association (Palea), the ground crew union at the national flag carrier, slammed Baldoz’s decision to allow the planned mass layoff of some 3,000 employees.
Gerry Rivera, president of Palea and vice chairman of Partido ng Manggagawa (PM), said: “The Department of Labor and Employment’s go signal for the retrenchment of half of the workforce means the death of job security at Philippine Airlines.”
On Friday, Baldoz denied Palea’s motion for reconsideration and affirmed the previous order by then acting Labor Secretary Romeo Lagman. Both Baldoz and Lagman found the planned mass layoff to be a legitimate exercise of “management prerogative.”
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