PAL's Bumpy Flight

The Philippine Journal

Sunday, November 3, 1996

This Is On Me

By FLORO L. MERCENE

I AM PRIVY to the fact that shortly after Lucio Tan took over control of Philippine Airlines a while back, the company's board of directors had advised him to reduce its bloated staff by about 20 percent through mass lay-offs.

With 14,000 employes here and abroad, PAL was definitely overburdened by too many workers, and this was one of the reasons for its inability to cope with financial losses over the years.

Every administration that took over the airline since the days of Don Andres Soriano hired its own set of people. Over time PAL became a bloated bureaucracy infested by cliques of untouchable people.

When Lucio Tan learned about the plan to lay off the excess personnel, he put a stop to it. Instead he called the rank and file to a meeting with a simple, direct appeal that went something like this: I'll do whatever it takes to turn this company around, but give me time to do it. Help me reach that goal and whatever prosperity it achieves will be shared by everyone.

Because of sloppy marketing efforts in the past, rising costs and a host of other problems, PAL has incurred accumulated losses of a whopping P10 billion for the past 12 years.

Despite the acquisition of new aircraft and prudent management, the airline continues to lose at the rate of P3 million a day. During the past three years, losses have reached P3 billion.

The one exception to this bleak picture is PAL's trans-Pacific service. Because of skillful management by its officer-in-charge in the US, Carlos Gonzalez, PAL is going to post profits on this route for the first time in years.

The introduction of new services between Manila and Vancouver and New York, in conjunction with Canadian International, and from Hawaii to Laoag gave PAL's trans-Pacific service a big boost.

This is supposed to be augmented further with new services from the US West Coast to Manila via Seoul, Korea starting this month.

It's also a fact that although PAL had been suffering financially, it has not backed out from its obligation to the employees.

The company's three unions — Airline Pilots Association, Flight Attendants and Stewardesses Association and PAL Employees' Association — have presented a wide range of demands.

Not rejecting these demands outright, PAL had been patiently trying to negotiate a solution to these demands for the last two years.

The gist of these demands is as follows:

1) A wage increase of P5,000, in addition to all government wage adjustments or

allowance increases;

2) Christmas bonus of 150 percent of basic salary;

3) 13th month pay;

4) Increase in overtime rates from 35 percent to 50 percent;

5) Increase in vacation leave days and sick leave days from 20 days to 30 days; and,

6) New benefits, such as educational loan, attendance incentive, free shuttle bus, car loan, housing loan etc.

PAL has been balking at the union's demands. The package means an additional P3.2 billion over two years, an amount that it can not grant at this stage without suffering financial collapse.

As it is, PALEA members alone are getting half of the company's P4 billion annual payroll. A typical rank and file employee is getting a basic pay of about P88,000 per annum, not counting two monthly bonuses and other benefits.

Lucio Tan's solution to PAL's — and the employees' — problems is simple, increase capitalization, modernize and expand its fleet. By refleeting and modernizing its equipment and expanding its services on the domestic and international front, new jobs will be created and the work force will become more productive.

PAL is on the throes of such a breath-taking move when the PALEA, really without much warning, called its wildcat strike.

* * *

By the time this comes out, the strike may have been settled and PAL is flying again. Even so the rash decision of PALEA to disrupt service is most regrettable. It may have cast a pall on the company's viability, seeing as how Lucio Tan is still trying to put together the money to buy 36 airplanes in the next two years.

The international financing institutions funding the expansion program might start asking funny questions.

What makes the whole strike affair regrettable was that the strike was called mainly for non-strikable issues — the reinstatement of 40 employees who were dismissed by the company two years ago precisely for engaging in an illegal strike.

These 40 employees apparently wield a lot of clout in the PALEA for it was upon their behest that the strike was called — an illegal strike promoted by illegals.

Be that as it may, we wish PAL all the luck now that it is back on its daring and very expensive program of expansion. Many of the world's airlines are having a rough flight, and here is our brave little airline trying to buck all the odds.