PAL questions ruling on cabin crew CBA

Posted on 11:35 PM, January 10, 2011

LUCIO C. TAN-led Philippine Airlines, Inc. (PAL) has asked the Labor department to reconsider a ruling favoring flight stewards and attendants over a collective bargaining deadlock.

Saying last month’s ruling did not have legal and factual basis, the airline said it was ready to appeal all the way to the Supreme Court.

A reversal of the decision will ensure operating efficiency in the flag carrier, which expects to post $1.5 billion in revenues in the current fiscal year ending March, PAL President Jaime J. Bautista said.

But the Flight Attendants’ and Stewards’ Association of the Philippines (FASAP) said PAL should accept the ruling then focus on operations and deal with competition.

“We think that this case is very important for PAL and the Labor department should give a second look and consider the arguments we have presented in our motion for reconsideration,” Mr. Bautista said in a news conference yesterday.

Mr. Bautista said the Labor department wanted the flag carrier to share income it did not earn.

On Friday, PAL filed the motion for reconsideration on the Dec. 23 decision of the Labor department.

In particular, PAL wants to:

• reconsider and reinstate PAL’s lump-sum offer of P80 million in wage increases to FASAP members considering its financial status for the periods subject of the collective bargaining agreement (CBA) negotiations;

• maintain the retirement age at 45 years old instead of 60 while eliminating any distinction between domestic and international flight attendants for flight assignments; and
• peg the monthly rice allowance for 2007-2008 of FASAP members at P1,200 until Sept. 30, 2007; P1,500 between Oct. 1, 2007 to Sept. 30, 2008; and P1,800 from Oct. 1, 2008.

Labor Secretary Rosalinda D. Baldoz, who assumed jurisdiction over the dispute in October to prevent a strike, resolved the deadlock in a Dec. 23 ruling. The ruling provided for the following:
• compulsory retirement age for all FASAP members at 60 years old;
• two pregnancy leaves for a maximum of seven months for each leave, to be credited in computing the length of service for retirement, 13th month pay, Christmas bonus, rice allowance, and trip passes;
• prospective application of pregnancy and maternity leave crediting;
• monthly rice allowance of P1,800 for the period covering July 16, 2007 to July 15, 2010, estimated at P25 million; and
• three-year salary increases totaling over P200 million.

In the motion, the PAL said it incurred losses of $297.8 million in the fiscal year that ended March 2009, and $14.3 million in the fiscal year that ended March 2010.

PAL said it therefore cannot pay the salary increase granted to FASAP for July 2007-2008, July 2008-2009, and July 2009-2010.

“In essence, [the Labor department] is directing PAL to grant hefty pay increases for July 2007 to July 2010 despite its knowledge and awareness of PAL’s massive losses for the same period,” Mr. Bautista said in the motion for reconsideration.

On the retirement age, Mr. Bautista told reporters 35 to 45 is the industry standard.

“Most, if not all, of PAL’s fiercest competitors in the Southeast Asian region [have retirement ages of] much less than 60 years old,” Mr. Bautista said in the motion.

But the flag carrier will accept the provisions on maternity leave, Mr. Bautista said.

Meanwhile, PAL’s decision to file a motion for reconsideration “is a clear sign that instead of promoting peace, management opts to continue fighting with its flight attendants,” Roberto D. Anduiza, president of the 1,542-member FASAP, said in a statement.

“The airline industry is very competitive but instead of focusing on running the business well, of selling more tickets and attracting more passengers, our management is concentrating on fighting its own front-liners, the flight attendants,” Mr. Anduiza added.

Asked what PAL will do if the Labor department upholds its decision, Mr. Bautista said: “We can file an appeal to the Court of Appeals and up to the Supreme Court also.”

Meanwhile, PAL is on track toward posting $1.5 billion in revenues for the fiscal year ending March, up from around $1.4 billion last year.

“We are close to our projection because last December was one of the most profitable months,” Mr. Bautista said.

“The economy of the United States has already recovered and profit has improved for the entire airline industry,” Mr. Bautista added.
PAL expects higher revenues following the start of flights to New Delhi in March. PAL will pay $35 million-$40 million in unsecured debt in June.

PAL posted modest gains of $28.2 million in the second quarter of its fiscal year covering July to September. In a filing with the Securities and Exchange Commission last month, PAL reported revenues of $399.5 million for the period, up by 33%. -- Neil Jerome C. Morales