Reverse backpay ruling, PAL asks DOLE

Monday, 10 January 2011 21:04   Recto Mercene / Reporter

CITING the huge overlay to cover the cost in the rise of aviation fuel among other expenditures, flag carrier Philippine Airlines (PAL) on Monday appealed to the Department of Labor and Employment (DOLE) to reverse its ruling granting hefty back-salary increase and higher retirement age for cabin crews.

PAL president and COO Jaime Bautista, in a press conference, said that apart from lack of legal and factual basis, the DOLE ruling is “confiscatory” as it obliges the flag carrier to share income it has yet to earn.

On Friday PAL lawyers filed a motion for reconsideration against the DOLE’s order raising the flight attendant’s retirement age to 60 years old. Bautista said the ruling has no justification in law and jurisprudence, and goes against industry practice worldwide.

According to Bautista, the cost of fuel at the start of the fiscal year was $80 a barrel, which would mean $5.5 million for PAL. Now that the cost of fuel is going from $80 to $90 a barrel, or a difference of $10 a barrel, PAL is
expected to spend $55 million this year alone.

“Fuel cost represents the largest overhead in terms of expenditures for PAL, followed by labor and then maintenance,” Bautista said.

On December 23, 2010, Labor Secretary Rosalinda Baldoz favored the Flight Attendants and Stewards Association (Fasap) with the grant of P222 million in total back-salary increase, compulsory retirement age of 60 years and increased monthly rice allowance of P1,800 and other benefits.

The DOLE also wanted PAL to reinstate its lump-sum offer of P80 million to Fasap.

PAL said the DOLE’s wanton disregard of the evidence and rule of fair play is a violation of its duty to render a decision based on fact and law, Bautista said.

Although the subject of the labor dispute is the deadlock in negotiations between the contending parties from July 2007 to July 2010, the DOLE based its economic awards to Fasap on PAL’s purported financial statements for fiscal year 2010-11.

“These financial statements cannot subvert or supplant the fact that PAL incurred losses and, in essence, DOLE is directing PAL to grant hefty pay increases from July 2007 to July 2010 despite its knowledge of the airline’s massive losses for the same period,” Bautista said.

He added that PAL could only infer that the DOLE viewed future earnings can be applied to salary increases it granted to Fasap.

“This will result in an absurd situation,” Bautista said.

He called the DOLE’s move “unthinkable fiscal maneuvering,” considering that it already pledged PAL income for the coming years, and wondered where PAL is supposed to source funds for succeeding demands for salary increase when negotiations for 2010-15 CBA begins.

To prove its point, PAL presented to the DOLE its records showing losses of $297.8 million in fiscal year 2008-2009, and $14.3 million for fiscal year ending March 2010.

On the retirement-age issue, Bautista said DOLE should not have ignored that the memorandum of agreement between the company and Fasap that provided lower-retirement age was the product of voluntary negotiations of their previous CBA.

PAL said the Labor Code, as amended by RA 7641, states that any person may be retired upon reaching the retirement age established in the CBA or other applicable employment contract.

“Thus, a careful reading of the provision indicates that employers and employees are at liberty to agree and fix the applicable retirement age even at below 60 years old.”

Bautista pointed out that the DOLE failed to consider that the average retirement age of most, if not all, of PAL’s fiercest competitors in Asean is much less than 60 years old.

“Early retirement for flight attendants is fast-becoming the rule rather than the exception,” he pointed out.

Bautista rebuked the DOLE for accepting Fasap’s argument that since the 2005-10 CBA on agreed retirement age had expired, then there is no more agreed retirement age to invoke.

“We can’t understand how DOLE and Fasap can legally justify that only the retirement-age provisions of PAL-Fasap CBA have expired, while other provisions on salaries, perks and work rules remain valid and in effect,” he added.

Bautista said even in the absence of an agreement, outright rejection of PAL’s position is not warranted without taking into account the bargaining history between the parties.

He said PAL did not force Fasap to accept the early-retirement provisions, as these were subject of negotiations and were approved and ratified by Fasap members in exchange for numerous concessions, in the form of monetary benefits, easier work rules and other perks.

On the other hand, Fasap president Bob Anduiza praised the DOLE decision as a golden opportunity for both parties to work together and face the tough competition in the Airline industry.

“We urge PAL to join hands with its flight attendants. We need one another to support the company’s operations and beat PAL’s competitors.”

However, Fasap said on Monday it is “obvious that PAL management opt to continue fighting with its flight attendants.”

Anduiza pointed out that PAL management has the capacity to pay Fasap for salary increases, citing the DOLE’s report on the financial statements of PAL last year.

Baldoz cited PAL’s own financial statements for April, May and June 2010. The records show that its “equity had doubled from P1,695,532,000 [as of March 31, 2010] to P3,321,653,000.”

“It is really pathetic that PAL is once again hogging the news not to promote travel and tourism, but because of labor disputes. 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 frontliners, the flight attendants,” Anduiza said. (With S. Fabunan)