20-Apr-2010 11:17 AM

Philippine Airlines expecting ongoing losses and warns of bankruptcy unless it restructures

Philippine Airlines President, Jaime Bautista, stated the carrier could expect losses of USD11-22 million p/a if it does not implement its restructuring programme (abs-cbnNEWS.com, 20-Apr-2010). The carrier stated staff affected by the spin-off of its inflight catering services, airport services and call centre reservation units will be entitled to separation benefits, including one month salary for every year of service and non wage benefits, including free fares. This is expected to cost the carrier USD45-56 million, to come from PAL’s retirement fund and internally-generated cash. The next phase of the restructuring programme will affect its medical, information technology unit and some HR and administrative positions. PAL expects to report another loss for the 12 months ended 31-Mar-2010, despite “better than expected” revenues in Jan-2010 and Feb-2010. The airline plans to launch its restructuring programme on 31-May-2010.

Philippine Airlines:
“It will be a direct additional loss to PAL. We need to implement this [restructuring program] because it is already out of our control… We are not the only airline that is outsourcing some of our operations. This is the practice of other airlines nowadays. In fact, we are the only airline that has not outsourced yet…If we implement the restructuring program then we will be close to the ideal employee-per-airplane ratio which is less than 100 to one wide-bodied airplane. Right now, we have 19 wide-bodied aircraft. We will also be able to realize savings of USD20 million to USD30 million a year should we outsource the non-core business units…PAL has no choice but to restructure...PAL has to meet its huge outstanding obligations as they fall due to prevent creditors from taking over the business. Painful as the restructuring program is, the alternative – bankruptcy – is even more unpalatable and injurious to all concerned,” Jaime Bautista, President. Source: abs-cbnNEWS.com, 20-Apr-2010.

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