Stormy Weather

Manila Standard

Monday, November 4, 1996

By Nelson Navarro

Not too long ago, one of America's largest airlines was headed for the congested graveyard of failed air carriers. Business was so bad it was actually losing more money every time one of its planes took off from some airport. Armies of creditors were knocking at the door. The dreadful choice was to find some magic formula to stave off imminent bankruptcy or to end all miseries by simply closing shop.

As luck would have it, the distressed airline survived the worst trial of its long history as America's and the world's largest airline (second only to the Soviet era Aeroflot). Extreme measures were resorted to, but none as unexpected or as miraculous as its employees in their tens of thousands opting to save their own airline.

When push came to shove, so it was said, the rank-and-file people decided overwhelmingly to cast aside their grievances, if only to save the airline and their jobs from the far-harsher, nay unappealable fate of bankruptcy. Sure, they could have thrashed the dirty capitalists for good, but that would have amounted to a pyrrhic victory, a hollow triumph that would have led them straight into the nation's unemployment lines.

The majority of the employees actually voted to have their salaries slashed and some of their perks and privileges curtailed or held in abeyance. Nothing short of these sacrifices would have sufficed to save the company from certain collapse.

Exactly what the rescue package entailed isn't quite clear to the layman, but the company essentially granted stocks plus participation in management to the employees in exchange for their concessions. The new management was given a free hand to rationalize operations to make the company competitive once again in the most cut-throat industry of all in the world. In the first months of this historic compromise, airline employees went around with buttons saying they were the airline's "new owners." This instantly translated to better service inflight and on the ground.

Since that unheard of moment a few years ago, the airline has regained much its old spunk and added more bounce to its operations, even venturing to become the first truly global carrier many years after the collapse of Pan American Airways in the 1970s.

Give or take a few details, this is roughly the dream scenario that some hardboiled crisis

managers are trying to push on the warring parties of Philippine Airlines. For starters, the management has offered to sell P477 million in stocks at a minimal price to the employees so that they can become part-owners of the company they work for.

Perhaps it may be case of too little, too late. The Philippine Airlines Employees' Association (Palea), the biggest of PAL'S three unions (9,000 of 14,000 total employees), was already too far into its wildcat plans to cripple the airline on the eve of the All Saints' Day holidays and less than a month before the opening of the APEC summit when the stock-sharing proposal was announced last Monday.

By Wednesday, the airline was swamped by flight delays and cancellations left and right. Thursday and Friday were pure hell. Even foreign airlines serving Manila were not spared, largely because much of their ground services, especially baggage handling, are in the hands of PAL and therefore vulnerable to Palea's whims and caprices.

Also, the stock-sharing came in a package that would have hardly appealed to Palea nor to the two other unions, ALPAP, the pilots' group and FASAP, the flight attendants' group. For instance, P477 million in stocks doesn't give the unions much leverage in an airline which is soon raising its capital base to P10 billion and which will fall into the even tighter control of Lucio Tan group (56 percent) under the terms of the recent compromise agreement with the government. Still, it's a step in the right direction.

Mercifully ended last Saturday, the wild-cat strike was of course held in direct defiance of a Department of Labor order banning any strike or mass action that would prejudice PAL's operation during the APEC summit period. It was a matter of national interest, said DOLE Secretary Leonardo Quisumbing, that PAL remain flying, if only to show the national colors and convince the world that the Ramos administration is in firm control of a stable economy that's on the march as Asia's newest tiger.

Well, Palea didn't seem to care a hoot. Although the pilots and flight attendants were technically not on strike, many of their members openly declared "sympathy" for the strikers and refused to cross picket lines. Repeated orders to return to work on pain of summary dismissal were ignored.

It was as if Palea was begging for "martyrdom" (police brutality, summary dismissals, etc.) all the better to make up for the public relations disaster of stranding thousands of irate passengers on the way to visit the graves of their loved ones. The PAL management, on the other hand, came across as shrewdly absorbing the blows to give the strikers more rope with which to hang themselves. Labor and intelligence officials, for their part, added massive doses of intrigue by speculating that the wildcat action may, in fact, be part of a leftist plot to sabotage the administration during the APEC summit.

Fortunately, the proverbial cooler heads got the warring parties together and they inked that Saturday truce everybody, of course, expects to be temporary at best. The real battle has just begun, with action shifting to hard bargaining across the board. A new collective bargaining agreement is supposed to be signed by Nov. 21 or just three days before the 17 heads of state are scheduled to arrive in Manila.

Will there be another strike just in time to really screw up FVR's international "coming-out party"? We would hope not. But going by the advance publicity, so to speak, it's difficult not to predict lots of stormy weather ahead. The only question is whether Malacaňang has enough chips to cash in or powers of coercion to prevail upon the PAL players to please not pee on the President's, nay the nation's big parade.

To begin with, Palea is said to be asking for the moon in terms of salary increases and other perks, to the tune of P3.2 billion for the next two years.

How this demand can be satisfied, even partially, by an airline that has lost at least P10.7 billion over the past 10 years is difficult to figure out. As it stands, PAL bleeds at the rate of P3 million a day or PI billion a year. Last week's strike alone cost P100 million in lost revenues and losses, according to company spokesmen.

Something's got to give. No longer has a government-run airline, PAL had to operate under the iron rules of business. It can no longer throw good money after bad, expecting Juan de la Cruz to pick up the tab each and every time. First, it must raise more capital (it's doing so). Second, it must improve its fleet and services (Tan has pledged P10.4 billion). It must catch up with the competition in the brutal world out there. Only then can it become a truly viable airline, hopefully after five more years of red ink.

But to pull off his turnaround, PAL has to be blessed with a good measure of industrial peace. Management and labor must meet halfway or there will be continued paralysis, itself synonymous with eventual shutdown. The sooner the battle lines are drawn and the hard options sorted out, the better to save PAL from oblivion.