Tan Stands Firm Behind PAL Workers

Filipino Monitor

November 26 – December 9, 1998

Editorial

MASS LAYOFF of Philippine Airlines workers under a proposed Cathay Pacific rehabilitation program is enough good reason for PAL officials to call off merger talks with the Hong Kong-based airline.

Disagreement over the retrenchment plan may yet force Philippine Airlines to resume negotiations with Northwest Airlines, which is also interested in a merger.

Cathay’s retrenchment plan was just too much for PAL chairman Lucio Tan who felt he has an obligation to the workers, especially the pilots who stayed on with PAL at the height of the crippling pilots’ strike.

It would, indeed be a bad idea for PAL to enter into a deal which would involve the layoff of workers who remained loyal to the airline during rough times.

Remarks from Malacañang Executive Secretary Ronaldo Zamora revealed Mr. Tan’s feelings toward PAL workers.

“Mr. Tan would not want retrenchment which is more than what he had committed to the union. He will not sacrifice more than what is needed,” he said.

This was the view of President Estrada who said the main concern of the government are the workers; that there will be no layoffs when PAL decides to merge with either Cathay or Northwest.

By standing firm behind the PAL workers, Mr. Tan had displayed an enlightened attitude toward labor-management relations.

When he took over the PAL management from the government, Mr. Tan ruled out retrenchment measures even when he knew that the airline had more than enough.

The PAL Chairman reportedly flew to the United States, presumably to renew negotiations with Northwest, a much bigger airline than Cathay Pacific and a non-competitor in the Asian route.

Cathay wants to trim the PAL workforce to about 5,000, but Mr. Tan did not want to cut the number of workers below 8,000 to avoid antagonizing the union.

Cathay also wanted to layoff some 200 pilots, a proposal also opposed by the PAL Chairman.

PAL had earlier accepted a preliminary investment offer from Cathay Pacific, the two companies had announced that they will draw up a comprehensive plan to rehabilitate the ailing Philippine flag carrier.

The International Finance Corporation, the investment banking firm of the World Bank plans to shoulder 20 percent of Cathay’s proposed investment.

PAL’s 20 percent stake in the airline was what the PAL management under Mr. Tan promised the workers in exchange for a 10-year period of industrial peace, while PAL is undergoing rehabilitation.

Based on management estimates, PAL needs some P6 billion for a smooth run of its domestic and international flight operations.

The government is right to intervene in the merger negotiations because at a time when a lot of people are losing their jobs, it must undertake all possible efforts to save these PAL workers. There is no reason why it should not encourage PAL to seek a better deal.