Even Erap's No Longer Hopeful on PAL Case

Manila Standard

Sunday, September 20, 1998

By Jullie Yap Daza

President Estrada acknowledged yesterday that hope was dwindling on the PAL case after LucioTan, the airline's chairman and majority owner, declined to meet with him Friday.

On that day, PAL's largest union also sent Mr. Estrada a letter refusing to hold a referendum among its members on whether or not to accept as rescue plan offered by Tan. The plan would give workers 20 percent of the company's stock and three seats on its board in exchange for a 10-year suspension of their collective bargaining agreement (CBA). AP

PAL’ s last flight

Its wings clipped by Interminable labor problems, Philippine Airlines will turn off the lights at midnight Wednesday, Sept. 23, and send its last international flight, PR 102, on its way to San Francisco and Los Angeles at 9:30 p.m.

The plane will come home to a farewell ceremony as PR 103 at the international airport on Friday, Sept. 25, at 4:30 a.m.

But it will be sunset for Lucio Tan's involvement in the airline where he has lost PI5 billion of his own money in the last three years.

"I'll just have to look for another business," he said from Cavite where he was stranded by bad weather yesterday morning. His pilot refused his helicopter as typhoon Gading buffeted the islands.

Like a failed love affair

The stormy weather matched the maelstrom inside Tan's heart. His staff said he told them when it was time to close shop. “This is the first time I am calling a meeting to discuss bankruptcy."

They said Tan's “impossible dream" to turn around PAL hurts the tycoon “like a failed love affair."

The airline's union of pilots — neither the union nor the pilots have any legal standing now in the eyes of PAL management. Since they have been considered dismissed — and its employees association has called the chairman names. Accusing him of channeling PAL money to other businesses, and of “blackmail."

The unkindest cut of all, said Tan's managers, is how easily the facts are being twisted and how quickly the chairman's sacrifices for the company have been so conveniently forgotten. Tan never received a single centavo as salary, unlike previous chairmen who collected fat allowances, fees and perks.

Two pay raises

Two salary increases across the board were granted during his term. In Christmas 1996, to reward the maintenance and engineering department for on-time performance, he distributed 3,000 envelopes, each containing $250. The money came from his own funds. In 1995, when he came came into his chair to preside over the PAL board, the airline had no CBA; it was during Tan's term that a collective bargaining agreement was signed.

That CBA — negotiations, implementation, interpretation — has caused four strikes between 1994 and 1998, the last two of which have been so crippling that without fresh capital infusion now of $50 million to $I00 million, the airline is as good as dead.

It was not Tan who pronounced the death sentence, however. The Sept. 21 deadline for PAL's rehabilitation plan to be presented to the Securities and Exchange Commission and creditor banks did not come from the chairman.

LEK, Operational consultants, and Chase Manhattan Bank, financial consultants, drew up a package of options, but without industrial peace and cooperation of the employees the airline would still not be able to attract investors.