SOME 3,000 workers are set to lose their jobs by end-May as the country’s flag carrier Philippine Airlines Inc. (PAL) will implement its spin-off/out-sourcing plans, president Jaime B. Bautista’s letter to the union said.
“Further to our 09 September 2009 letter officially advising you of the spin-off/outsourcing plan of the company in compliance with the current PAL-PALEA CBA [collective bargaining agreement], please be informed that PAL will spin-off 1) in-flight catering services operations 2) airport services (i.e., ground handling, cargo terminal/cargo handling, and ramp handling) and, 3) call center reservations effective at the close of business hours on May 31, 2010,” Bautista said in a letter to the PAL Employees’ Association officials.
PALEA president Gerardo Rivera told BusinessMirror on Sunday that he estimates the company to spend about P3 billion for “an illogical business decision that would not even save that much as well as contrary to what we think investors want: industrial peace.”
Rivera said they were slightly caught in a surprise with the content of Bautista’s letter dated April 16, 2010, “since he didn’t raise this during our meeting with him on April 8.”
Rivera said Bautista even assured the PALEA leaders the ills of PAL –a US$46.5-million obligation maturing by June 2010, among others– wouldn’t affect the manpower.
“Sure, there were what I call pocket outsourcing, with some jobs being outsourced, but not at this scale and imminence.”
In his letter, Bautista said the company “implemented a manpower rationalization program affecting more than 400 executives and administrative employees” since September last year.
Bautista cited as a basis for the restructuring “staggering losses of over US$350-million (more than P15-billion) in the last two years, [leading to] the company's equity position as of February 2010 [dropping] precariously to US$1.1 million.”
He wrote that “apart from a series of cost-cutting initiatives, PAL approached several investors but none of them were interested. They said airlines are the last business they want to go into given the fact that in 2009 alone. more than 20 airlines went bankrupt.”
Bautista added that they “approached government for help but it, too, was in dire financial straits.”
Hence, he said, “PAL has to act quickly and decisively by spinning off” its operations.
“All affected regular positions will be deemed abolished from PAL's table of organization effective at the close of business hours on May 31.”
Rivera said the union “will not take this issue sitting down as the welfare of the families of those affected are at stake.”
He added beginning Monday, they will try to sit down with the management to find alternative options to this decision.
Rivera also said they will exhaust legal means to respond to this issue.
He said only a thousand of the estimated total 4,000 PAL employees won’t be affected by the lay-off if it pushes through.
PAL’s parent company, PAL Holdings Inc., was thinly traded two days before Bautista sent his letter.
The stock price remained at P3 at its closing, hitting only P3.05 as its highest level, with trade volume merely a hundred thousand and a value of P300,250 at its last trading day April 14.
PAL’s parent was able to reduce its net loss in the nine months ending December 2009 by 93.67 percent to P0.911 million from a P14.4-million net loss in the same period in 2008.