11-Nov-2010 8:54 AM

PAL tells Congress it needs restructuring, spin-offs to survive

Philippine Airlines told (10-Nov-2010) Congress that its corporate restructuring and spin-off programmes are necessary to ensure the flag carrier’s survival in a cut-throat airline industry buffeted by massive losses in the past two years. Speaking before the House Committee on Labour, PAL President and CEO Jaime Bautista maintained that the recent decision of the Department of Labour and Employment (DOLE) affirming PAL management’s prerogative to restructure its organisation “is based on solid legal grounds”. It also provides a generous separation package to about 2600 affected workers. PAL stated it is “more than willing” to submit its financial books to Congress to prove it is losing money (GMANews.TV, 10-Nov-2010). It submitted its audited financial statement for the past three years on 10-Nov-2010. Congress asked PAL to also submit its interim financial statement for Jan-2010 to Sep-2010. Mr Bautista also said that had DOLE ruled against PAL’s restructuring plan, the airline and all other businesses in the Philippines would be placed in a very difficult situation. The PAL spin-off plan, as approved by DOLE, was estimated to cost the airline some PHP2.5 billion (USD57.6 million). Mr Bautista declined to comment in detail on issues related to alleged age and gender discrimination, maternity benefits and additional pay for PAL’s flight attendants, stressing that the same have pending litigation before the labour department and Commission on Human Rights

Mr Bautista added complaints by PAL Employees Association (PALEA) officers and other militant groups that the DOLE ruling trampled on workers’ rights have no factual or legal justification. He stressed that PAL’s string of massive losses in the past two years amounting to USD312 million, necessitated the spin-off to ensure PAL’s survival. He said the sale of the three non-core units was only done as a last resort after 14 major cost-cutting measures proved inadequate to guarantee PAL’s continued operations. He also stressed that hiring third-party service providers after PAL decided to close down its non-core units is not "contractualisation" as the union claims. PALEA also claims the carrier is just concealing its true financial position to outsource jobs. President Gerry Rivera stated the union is willing to strike as early as next week (Philippine Daily Inquirer, 11-Nov-2010). He added the outsourcing of in-flight catering, airport services and call centre reservation operations is just the “first of a series of outsourcing that PAL intends to implement”. The jobs cuts represent 70% of PALEA’s membership. [more]

Philippine Airlines: “DOLE upheld not only once, but twice, PAL’s position that the planned spin-off ‘is a matter of sound business judgment ... in order to maintain the survival and sound financial health of the company in a globally competitive airline industry. Local and foreign investors would shy away from the country if businesses are barred from exercising their right to control and manage the course and direction of their respective enterprises,” Jaime Bautista, President and CEO. Source: Philippine Airlines, 10-Nov-2010.

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