Philippine Airlines (PAL) President and CEO Jaime Bautista stated the carrier recognises and will abide by the decision of the Philippine Department of Labour and Employment (DOLE) over enhanced severance packages for the carrier’s plans to spin-off three non-core operating units (Philippine Star, 03-Nov-2010). The carrier plans to sell its in-flight catering, airport services and call centre reservation units, but needs to finance the severance package of close to 2600 workers. PAL employs 7500 staff. The sale was originally estimated to cost PHP200 million (USD47.1 million) but DOLE raised the estimate to PHP2.5 billion (USD58.8 million) due to a ruling requiring enhanced separation benefits and other modifications to financial and non-cash awards. PAL will seek loans from the Philippines Government financial institutions, or turn to other PAL creditors if government financing is not available. The sale of the unit is expected to save PAL PHP500 million to PHP1 billion (USD12 million to USD24 million) p/a.
Philippine Airlines to abide by decision increasing labour severance package costs
You may also be interested in the following articles...
Airline strikes: 2016 a peak year for Europe's legacy airlines. Wakeup time, as LCCs pick them off
Pilot strikes at Lufthansa. Again. A strike ballot among British Airways cabin crew. A guilty verdict for Air France workers who assaulted an executive during a union protest. These were all headlines in late Nov-2016, following Air France pilot and cabin crew strikes in summer 2016. Labour relations at Europe's three biggest legacy airline groups are an ongoing challenge.
A CAPA report in Jun-2016 highlighted the growing number of articles on CAPA's website mentioning the word 'strike'. It raised the possibility that if the rate continued through the year, 2016 could be the biggest year for strike-related articles since before the global financial crisis. With a little under a month still to go, this year has already comfortably passed this milestone.
To a large extent labour unrest grows as airline industry profits increase. However, rather than hoping for an industry downturn to reverse the rise in the cycle of strikes, airline CEOs are talking tough – a line long taken by IAG's Willie Walsh. Lufthansa's Carsten Spohr has said that taking on the pilots is "about the future of Lufthansa", noting that it has “no chance of survival" if it gives in to pay demands (Bloomberg, 24-Nov-2016).
Philippines-China air service growth to lift Philippines' Chinese tourism as Duterte changes horses
First bananas, then people. China's lifting of a trade ban against bananas from the Philippines bodes well for aviation. Relations between China and the Philippines turned negative in 2012. The issue was primarily over China's claims to uninhabited islands – a debate that also caused China-Japan relations to turn sour. China banned Filipino banana imports and issued a travel warning against the Philippines. Travel warnings from China carry more weight than in other markets since state-owned/linked travel agencies essentially stop selling the impacted market. Diplomatic rows have resulted in drastic reductions in outbound passenger flows from China.
Japan has more than recovered but the Philippines' underexposure to China is well evident: the Philippines has received the least number of Chinese tourists in Asia. Laos and Cambodia, far smaller than the Philippines, each received more Chinese tourists than the Philippines.
New Filipino President Rodrigo Duterte is pivoting Manila's allegiance away from the US – to China. His presidency is young and the calculation has its sceptics, but China appears to be warming. Following the lifting of its ban on banana trade, China is expected to use President Duterte's visit to Beijing to lift its travel warning against the Philippines. This will likely stimulate large air service growth between China and the Philippines. Yet for existing markets, there is some concern that the Philippines presents new competition.